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📕 Reads of the Week

Market Updates

• HVAC is just one of the specialty trades that keep benefiting from the Data Center Boom. Data center construction spending rose by 46% year-over-year in Q2, as HVAC contractors alone logged more PE deals in the first half of 2026 than in all of 2025 combined. Link

• Lincoln’s Q2 2026 European Private Market Index. Link

• “In the current environment, it’s difficult to find scenarios where real estate equity would outperform current pricing on real estate debt”. Link

Manager & Deal Updates

• 🎧 Crossroads with Oaktree’s Bob O’Leary and Armen Panossian. Link

• The main constraint on our industry is not fundraising. In a market where deal volumes have contracted, and competition is intensifying, the real challenge is finding enough quality investment opportunities. ICG just raised its $14 billion European Corporate IX. Just before the fundraise was announced, CEO Benoît Durteste sat down to discuss the outlook for private credit. Link

Partnership Updates

• Fasanara, a British alt manager, is partnering with stablecoin issuer Tether to launch StableFund, a private credit vehicle that aims to raise as much as $3 billion. Tether has committed $400 million to the fund, which Fasanara Capital will deploy into short-term, asset-backed loans. Tether will also source USDT-linked financing opportunities and provide the infrastructure for moving funds. More here

Secondaries Updates

• PennantPark, a US middle market credit manager, closed its $745 million Credit Secondary Fund. The continuation vehicle was led by Pantheon. More here

• Bridgepoint Credit, a UK-based credit manager, closed a ~$1.4 billion continuation fund led by Pantheon. The fund acquired ~€1.2bn of commitments from Bridgepoint Direct Lending II, a 2017 vintage direct lending fund, and is weighted towards senior secured credits across healthcare, services and technology sectors, with borrowers across the UK, DACH, Nordics, Benelux and French middle market. More here

BDC Redemptions

Q3 26 Update: Week 2

Last week saw two more BDC funds announce Q3 redemptions:

• Redemption requests have fallen for all managers so far.

• BlackRock’s BDEBT received redemption requests lower than its cap

• All other managers capped payouts at 5%.

The 2021–22 Vintage Comes Home to Roost

BlackRock published a private credit update. Below are my highlights:

👉Read BlackRock’s private credit update

The 12 largest BDC portfolios are shrinking

• Investments sold or repaid exceeded fundings for the 3rd quarter in a row

• Not only that, but the trend has worsened

• This is largely driven by weak deal activity, as investments sold or repaid remain broadly consistent with the long-run average.

Total YTD BDC Returns are nearly back at 0%

Smaller borrowers continue to grow more slowly

70% of foreclosure activity is concentrated in loans originated in 2021 and 2022

👉Read BlackRock’s private credit update

💰Fundraising News

ICG’s $14 bn European Corporate IX

ICG announced a final close of ~$14 billion for its Europe Fund IX. The flagship European Corporate strategy will target 15-20 investments in Western Europe across middle and upper-middle market companies, with deal sizes ranging from €250 million to €1 billion. The investments are generally industry-agnostic and will include a blend of debt and equity-like investments.

👉 ICG Announcement

Jefferies’ $4 bn European direct lending strategy

Jefferies Credit Partners has raised $4 billion for its European direct lending strategy. The fund’s perpetual structure provides institutional investors with a portfolio of sponsor-backed, senior secured private credit investments across Europe and the UK. The fund will primarily focus on middle market and upper middle market deals.

👉 Jefferies Announcement

HarbourVest’s $2.4 bn Credit Secondaries Strategy

HarbourVest raised $2.4 billion in initial commitments for its new private credit secondary strategy. The capital sits across several vehicles, including a senior credit secondary fund and an opportunistic credit secondary vehicle, and the firm has not disclosed an overall target, with fundraising expected to run through 2027. Around $500 million has been deployed across five transactions, three GP-led and two LP-led, with several hundred million dollars of further opportunities in the pipeline.

👉 PE Wire

Hercules Capital $2.3 bn Venture & Technology Lending

Hercules Capital, a US Venture Lender, raised $2.3 billion across two institutional private credit vehicles. The vehicles are the Hercules Evergreen Fund, a perpetual open-end fund, and Hercules Growth Lending IV, a closed-end fund, both lending to growth-stage technology and life sciences companies.

👉 Hercules announcement

EIG’s $1.9 bn Infrastructure Debt Fund VI

EIG, a US-based energy and infrastructure specialist, closed its $1.9 billion Senior Infrastructure Debt Fund VI. The fund provides senior secured debt investments across a broad range of sectors, including power generation, renewable energy, energy transition infrastructure and other critical infrastructure, with a primary focus on opportunities in the United States and Europe.

👉 EIG Announcement

Bridgepoint’s Evergreen Fund

Bridgepoint launched a European evergreen direct lending vehicle aimed at institutional investors. The vehicle will be an extension of the firm’s European direct lending strategy; it is not designed as a semi-liquid offering for individual investors. More here

👉 PE Wire

Secondaries Updates

• PennantPark, a US middle market credit manager, closed its $745 million Credit Secondary Fund. The continuation vehicle was led by Pantheon. More here

• Bridgepoint Credit, a UK-based credit manager, closed a ~$1.4 billion continuation fund led by Pantheon. The fund acquired ~€1.2bn of commitments from Bridgepoint Direct Lending II, a 2017 vintage direct lending fund, and is weighted towards senior secured credits across healthcare, services and technology sectors, with borrowers across the UK, DACH, Nordics, Benelux and French middle market. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

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📕 Reads of the Week

Manager & Deal Updates

• Claret Capital, a European Technology & Life Science lender, closed its fourth growth debt fund at €575 million, almost doubling the €297 million raised for Fund III in 2022. More here

• ByteDance raised $30 billion from nearly 30 banks to help fund AI projects outside of China. The loan is the second-largest made in Asia this year after SoftBank raised $40 billion in March. Chinese, U.S., ​European and Singaporean banks are participating in the financing, the people said, with the three-year loan co-ordinated ​by Citigroup and JPMorgan. Link

• Blue Owl opened a Zurich office to support its engagement with financial intermediaries in Switzerland, including private banks and wealth managers. It is Blue Owl’s eighth office in the EMEA region and its twenty-fourth globally. Link

Market Updates

• Hamilton Lane: The Rise of Opportunistic Credit. Link

• Dividend recaps are down 40% YoY. Link

Headline vs Reality…

Non-investment-grade credit has a 3% default rate. The private non-investment world is $1.8 trillion

That means $50 billion of defaults. There will be defaults.

Jon Gray, Blackstone

I remember reading this quote earlier in the year, and it reframed how I think about defaults. We should expect defaults; they’re the reason credit carries a spread.

It’s also changed how much weight I give to headlines about defaults. Last week, Bathla, an Australian real estate developer, became the latest private credit default to attract global attention.

Here are three reasons I think the story needs some perspective:

1. Bathla isn’t one of Australia’s largest developers. It didn’t make the Housing Industry Association’s top 20.

2. The headline debt number needs context. Bathla owes A$3.4 billion, less than 1% of Australian banks’ A$500 billion of commercial-property exposure.

3. Australia sounds like a large market, but its CRE market is roughly the size of Florida’s.

Strip away the headlines, and you have a mid-sized developer, a manageable debt pile, and a relatively small market.

Partnership Updates

• MUFG Group and BlackRock entered into discussions to partner in Japan-related private credit opportunities. The discussions will cover areas including the evaluation and sourcing of, and investment in, Japan’s private credit market. Link

• Mubadala Capital received a $500 million commitment from Alpha Dhabi, a UAE-listed investment holding company. Under the revised partnership agreement, Alpha Dhabi will double its capital commitment to $1 billion and increase its ownership interest in its joint venture, MICAD Credit JV, to 40%. Link

BDC Redemptions Update

If you missed the BDC redemption update for Q2 26, below is a summary:

• Investors asked to withdraw ~$24bn across the 15 non-traded BDC funds we track

• Managers met ~$8bn of the requests.

• Median requests were ~10% of NAV.

• All managers capped the redemptions at 5%.

• Read the full update here.

Q3 26 Update: Week 1

Last week saw the first wave of redemption announcements:

• Redemption requests have fallen for all managers so far.

• Cliffwater’s redemption requests w

• Golub received redemption requests lower than its cap

• All other managers capped payouts at 5%.

💰Fundraising News

Claret Capital’s $670 million European Growth Debt Fund

Claret Capital, a London-based manager, announced the final close of its Fund IV, exceeding its €500 million target and almost doubling the €297 million raised for Fund III in 2022. The fund invests in technology and life science businesses across Europe and globally.

👉 Claret Announcement

Arcmont’s $505 million European Direct Lending Fund

Arcmont, a London-based private credit manager, raised A$705 million ($505 million) from four Australian institutional investors for its European direct lending strategy. The strategy lends to European mid-market companies through senior secured, unitranche, and subordinated loans.

👉 Arcmont Announcement

BNP Paribas’ $600 million SRT Mandate

BNP Paribas Asset Management secured a $600 million significant risk transfer mandate from the Arizona State Retirement System, taking the pension fund’s total commitment to BNP’s SRT strategy to $1 billion.

👉BNP Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

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📕 Reads of the Week

Market Updates

1) Do banks have BDCs over a barrel?

The Fed published a great paper on bank funding to BDCs. A few bullets below:

• Funding is concentrated. The top three banks account for almost half of the lending to BDCs, the top five account for about two-thirds, and the top ten account for more than 80 percent.

• BDCs rarely change bank lenders, with data showing less than 1% of BDC borrowings with new bank providers.

• “The structure of lending arrangements means BDCs get rinsed for their borrowing during hiking cycles.”

• 👉 Read the Fed’s notes

2) The core middle market remains the key hub of European direct lending activity

• Deals between €100m-500m accounted for 62% of transactions in H126.

• Larger deals share of the total remained largely stable, with deal count for €1bn+ transactions being 15% on a year-to-date basis, well below the 21% peak in 2024.

👉 CVCs European Credit Perspectives

👉 Debtwire’s European Direct Lender Rankings

3) Securitizations are becoming a common feature of secondaries fundraising.

• Franklin Templeton’s $1.5 billion deal is the latest in a wave of CFOs

• The CFO structure opens the door to investors, such as insurance companies, to invest in highly diversified, long-dated pools of private assets in a way that offers some downside protection.

• 👉 Read Pitchbook

Manager & LP Updates

• Blue Owl led a $2.4 billion compute equipment financing for IREN, a US-listed AI Cloud platform. The facility is structured to fund equipment purchases in tranches over a defined draw period, allowing capital to be deployed alongside the delivery and commissioning of hardware. Link

• BlackRock is exploring potential buyers for TCP Capital’s remaining $671m loan portfolio. Link

• Partners Group raised $1 billion from Indonesian sovereign wealth fund Danantara. Link

Partnership Updates

• Legal & General and WTW, a global insurance broker, partnered to launch a UK private credit LTAF. The launch follows similar moves by Apollo and Hamilton Lane, which all launched LTAFs this year. Link

Learn more about LTAFs

Private Credit’s Sports Opportunity

Apollo published a great paper on the business of sports. Most of the analysis focuses on private equity; However, it also highlights the opportunity for hybrid and private credit solutions to unlock liquidity, optimise balance sheets, and capture equity-like upside with credit-like risk. Below are my highlights:

👉 Read the full report here

Sports Franchises Continue to Trade at Premium Valuations

• Just as athletes and teams have reset what is possible on the field, the business of sports is breaking records of its own.

• Franchise valuations, media rights, sponsorship deals, and global fan engagement are reaching levels once thought out of reach.

• The valuations of NBA teams have grown over 10x in the past 20 years; the global sports media rights market surpassed $60 billion in 2024

US Team Valuations have Outperformed over 60 years

• In an era defined by technological disruption and geopolitical volatility, few asset classes demonstrate genuine resilience.

• Professional sports stand apart for their structural insulation and cultural permanence. More than 73% of adults in the US watch sports, and over half follow American football—the country’s most popular sport.

• Because of the deeply embedded social and cultural relevance, sports franchises represent a long-horizon asset class. Team valuations have compounded at roughly 13% per year over the past six decades.

• Even amid rapid technological change, demand for live sports content has remained stable and adaptive—a pattern Apollo believe unlikely to reverse over the next 20 to 30 years.

Average Sports Teams are Meaningfully Underleveraged

• Traditional lenders have long treated the sector as niche, leaving inefficiencies and gaps in the capital stack

• Despite record valuations, most franchises remain under-levered at roughly 10% loan-to-value, creating vast potential for hybrid and private credit solutions to unlock liquidity, optimize balance sheets, and capture equity-like upside with credit-like risk.

Apollo estimates sports represents a $2.5 trillion+ addressable market, with a growing portion increasingly suited to private credit and structured capital.

Opportunities include:

• Senior secured team and league lending,

• Stadium and media-rights financing,

• Transfer-fee factoring

• NAV lending

• Preferred equity

👉 Read the full report here

💰Fundraising News

Nuveen’s $1bn Sustainable CRE Fund

Nuveen Green Capital, Nuveen’s sustainable finance, announced a first close of $1 billion for its C-PACE Lending Fund IV. C-PACE is a public-private financing program administered at the state level that provides building owners and developers with low-cost capital to make commercial buildings more energy efficient, water efficient, and climate resilient.

👉 Nuveen Announcement

BridgeInvest’s $612m Specialty Credit V

BridgeInvest, a US real estate credit manager, raised $612 million for the second close of its Specialty Credit Fund V. The open-ended investment vehicle lends senior-secured, middle-market commercial real estate loans across the US. It invests across real estate asset types (e.g., multifamily, industrial, retail, hotel and office) and business plans (e.g., pre-development, development, and cash-flowing). It targets loans with a deal size between $20 million and $150 million.

👉 BridgeInvest

Granite Asia $500m APAC fund

Granite Asia, a Singapore-based investment manager, announced its raised more than $500 million for its inaugural private credit vehicle, Libra Hybrid Capital Fund. The fund lends senior secured loans to businesses across Asia-Pacific.

👉 Granite Asia

Bridge $500 million Asset-Backed

Bridge, a New York-based purchase order finance platform, launched a $500 million direct lending programme for suppliers to the largest US retailers. Bridge originates and services the loans, funding up to 100 percent of a brand’s production costs against expected or confirmed orders from retailers including Walmart, Sam’s Club and Best Buy. Consumer packaged goods borrowers typically receive credit lines of $500,000 to $2.5 million, with individual draws running three to five months.

👉 Bridge Announcement

Edge Growth’s $22m First Close

Edge Growth, a South African SME investment manager, announced a first close of $22 million for its Impact Fund. The venture debt fund will invest in growth-stage businesses, typically at Series A to C funding rounds, that have proven their business models. Investment sizes will range between $1m and $4m per company.

👉 Edge Growth Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

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📕 Reads of the Week

Funds raised during higher-volatility periods deliver stronger long-term performance.

Private Credit funds raised in volatile periods outperformed by 3.3 percentage points of Net IRR and 0.2x of TVPI.

👉 Ares: Does Volatility Create Better Vintages?

Market Updates

• Carlyle: Global Private Markets Quarterly. Link

• Lincoln US Private Markets Index:

  • 70.7% of private companies reported YoY revenue growth

  • 64.0% reported YoY EBITDA growth

  • Revenue growth increased to 6.9% vs 6.5% in Q1 26

  • EBITDA growth increased to 5.6% vs 4.7% in Q1 26

  • Read the report here

• Private credit managers eye UK DB pension funds. Link

BDC bond performance has diverged from equity

Where might this divergence lead?

The recent experience of private real estate offers a useful precedent.

During the 2022 dislocation, private real estate vehicles initially resisted the decline seen in publicly traded REITs, only for valuations to converge later through a combination of public market recovery and private market markdowns.

👉 Pimco: What BDC Markets Are Signaling About Private Credit Valuations

Manager & LP Updates

• Blackstone led a CDN$2.5 billion “structured equity” investment in Air Canada’s loyalty business.

  • Investors will receive a minimum IRR of 6.5% if Aeroplan chooses to repurchase the equity stake in Year 5 or Year 8….

    • 👉 Blackstone’s Announcement

• Jefferies Credit Partners is raising a ~$1.2 billion private credit secondaries fund. Link

• Goldman Sachs Launched a Private Credit CIT for DC Plans. Link

Partnership Updates

• Standard Life announced a £2 billion partnership, with CVC, Prudential Financial, Goldman Sachs and MS&AD. The Partnership combines Standard Life’s leading PRT capabilities with CVC’s, PFI’s and Goldman Sachs’ global private markets asset origination. Link

• PGIM committed to a $3 billion multi-year forward-flow facility with GreenSky. Link

European Direct lending deal activity is still behind 2025

👉European Private Credit Monitor

Configure Partners’ Private Credit Quarterly

Configure Partners published its Q2 Quarterly Credit Report. Below are my highlights

👉 Read Configure Partners’ Report

US Direct Lending Slowed Materially in Q2

• U.S. private equity deal value declined 38% quarter-over-quarter.

• Quarterly issuance declined to $34B, less than half the $75B recorded in Q1 2026.

Dry Powder is at record levels ($bn)

What does this mean for private credit?

• Most investors believe demand for loans is well in excess of supply.

• Most deals have one or no covenants.

• Quality deal flow is expected to be the biggest headwind in the next 6 months

👉 Read Configure Partners’ Report

💰Fundraising News

Jefferies’ ~$1.2bn Secondaries Fund

Jefferies Credit Partners is raising ~$1.2 billion for a private credit secondaries vehicle. Structured as a continuation vehicle, the fund will acquire loans previously originated by Jefferies while also committing capital to new lending.

👉 PE Wire

Partners Group $1bn Asia-Pacific Evergreen

Partners Group, a Baar-Zug-based manager, secured a $1 billion private credit mandate from an institutional investor in Asia. The open-ended evergreen mandate targets direct lending opportunities in Asia-Pacific.

👉 Partners Group Announcement

Crestline’s $625 million European Capital Solutions Fund II

Crestline, a Texas-based alt manager, closed its $625 million European Capital Solutions Fund II. The opportunities fund invests across the capital stack, lending to asset-backed and lower-middle-market businesses across North and Western Europe. The strategy targets situations underpinned by tangible collateral, including hard assets such as real estate and infrastructure, as well as music royalties and litigation finance.

👉 Crestline’s Announcement

Northleaf’s $450 million Asset-Based Specialty Finance fund.

Northleaf Capital Partners, a Toronto-based manager, closed its inaugural $450 million Asset-Based Specialty Finance fund. The fund invests in specialist asset-based verticals including entertainment royalties, legal assets, healthcare receivables, and factoring.

👉 Northleaf Announcement

Ninety One’s $404m African Opportunities Fund 3

Ninety One, a London and Cape Town-based manager, closed its $404 million Africa Credit Opportunities Fund 3. The fund lends senior secured loans to businesses and critical infrastructure projects across Africa and other emerging markets. The strategy has now deployed over $1.4 billion across ~100 counterparties in over 30 countries.

👉 Ninety One

Homestead’s $350 million Agriculture Credit

Homestead Capital, a San Francisco-based investment manager specialising in US agriculture, announced the first close of its inaugural commingled private credit strategy. The fund originates senior secured loans to agricultural borrowers across the United States, collateralised primarily by farmland and other agricultural assets, addressing financing needs underserved by traditional agricultural lenders. The first close was anchored by a $150 million commitment from the private credit team of a large US state pension system, which views the strategy as an asset-backed lending diversifier within its private credit portfolio. Homestead is targeting $350 million in total commitments with a hard cap of $500 million, and has deployed more than $1.8 billion across US farmland and agricultural assets since its founding in 2012.

👉 Homestead Announcement

Polar Asset Management $215m SRT fund

Polar Asset Management, a Toronto-based alternative investment manager, raised more than $215 million in the first close of its second dedicated significant risk transfer fund. The strategy invests in SRT transactions, through which banks transfer credit risk on loan portfolios to private investors in order to manage regulatory capital. It follows the firm’s first dedicated SRT vehicle and expands one of the faster-growing niches available to private credit investors.

👉 Polar SRT

ACP Credit $123 million First Close

ACP Credit, a Poland-based manager, held a $123 million first close for its Fund II. The fund lends €5m–€25m to growing SMEs and mid-sized companies across Central European EU countries.

👉 ACP Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

👋 Hey, Nick here. A big welcome to the new subscribers from GIC, Park Square, and 9fin. You’re now one of the 3,282 subscribers, and you’re reading the 180th edition of my private credit newsletter.

Reading on Outlook? The links won’t work. Read it online

Every quarter, I summarise the 400+ pages of earnings transcripts from the largest managers. I do this for two main reasons:

1. It helps me understand the consensus views.

2. It brings out honest and sometimes provocative opinions.

Start with the Provocative Opinions if you’re short on time.

📚 Quotes of the Quarter

Provocative Opinions

• We Find Ourselves on the Happy Part of the ‘K’

• 95% of the Firms in Our Industry Want the World to Stop Changing Until the Principals Retire

• External Perception Is So Disconnected From Operating Fundamentals

• The S&P 500 Has a Concentration Problem

• 90% of the Narrative, 11% of Our Fee-Paying Assets

• It Feels Like There’s Indigestion

• The Marketplace Is Making a Mistake

• The Brain Damage Associated With People Businesses

• We’re a Winner, But Not Everybody Has Had That Same Experience

• A Lot of People Were Calling for This Massive Calamity

• Our Stock Is on Sale Today

• Wealth Flows Could Be More Pro-Cyclical Than People Thought

• It’s Not Our Strategy to Aggressively Take Control of Companies

• Refinancing Those Investments Will Be an Important Test for the Market

The Question Nobody Asked

Are the BDC Redemptions Over?

Consensus Views

1. Fundraising & Capital Formation

2. Deployment & Origination

3. Returns & Performance

4. Portfolio Quality, Defaults & Non-Accruals

5. Spreads, Pricing & Market Conditions

6. Investment Grade Private Credit & Insurance Demand

7. Asset-Based Finance & Specialty Lending

8. Real Estate, Infrastructure & Data Centers

9. Manager Strategy & Platform Growth

10. Wealth, Retail & 401(k)s

11. M&A, Consolidation & Secondaries

Transcripts can be found here

Provocative Opinions

We Find Ourselves on the Happy Part of the ‘K’

KKR — Scott Nuttall

Our industry is increasingly K-shaped, and most of the external focus is going to be on the unhappy part of the ‘K’. We find ourselves on the happy part of the ‘K’, and that’s what’s showing up in the numbers.

↩ Return to index

95% of the Firms in Our Industry Want the World to Stop Changing Until the Principals Retire

Apollo — Marc Rowan

The future that we see is incredibly bright. The steps our industry needs to take will cause profound change in the way we do business...

Firms that address this in the right way and the right time are going to separate themselves from the 95% of the firms in our industry who simply want the world to stop changing until the principals can retire.

↩ Return to index

External Perception Is So Disconnected From Operating Fundamentals

KKR — Scott Nuttall

We’ve been public 17 years. Joe and I have been here 30. As you and I have talked about, our space is subject to periodic bouts of external pessimism and periodic bouts of optimism. In our time here, I don’t recall a period of time where the external perception is so disconnected from the operating fundamentals and how it feels inside the firm. And in our experience, the best response to pessimism is performance, and so we’re largely inclined to let the numbers do the talking.

KKR — Robert Lewin

On the industry-wide criticism that capital is not being returned to LPs.

A common narrative that investors hear is that our industry isn’t returning capital to investors. This is just not accurate from a KKR perspective. We’ve actually had an acceleration in exit activity. The second quarter was the largest monetization quarter in our history.

↩ Return to index

The S&P 500 Has a Concentration Problem

Apollo — Marc Rowan

Recall that some 10 stocks are nearly 50% of the S&P. And when things go poorly, they go poorly all around. Private markets now offer the kind of diversification that investors used to expect in public markets when there were 8,000 public companies versus the 3,800 public companies we have today.

↩ Return to index

90% of the Narrative, 11% of Our Fee-Paying Assets

Blue Owl — Marc Lipschultz

We like the direct lending business. But remember, it’s now 35% of our assets. And the products that have probably been 90% of the narrative, are actually 11% of our fee-paying assets, which is the wealth products in direct lending.

↩ Return to index

It Feels Like There’s Indigestion

KKR — Craig Larson

Answering a question on whether the AI CapEx cycle is overbuilt.

hyperscaler data center spreads have widened pretty meaningfully just over the last couple of weeks. That stands in contrast to the broader IG markets, which, again, still pretty much remain at their tight. And we’ve had year-to-date this flurry of jumbo deals. I saw a note a day or two ago. I think we’ve had more $25-plus billion deals year-to-date than the last five or six years combined. And so, it does. It feels like there’s indigestion.

↩ Return to index

The Marketplace Is Making a Mistake

Apollo — Jim Zelter

The marketplace in aggregate is making a mistake by just thinking the global industrial renaissance is AI and data centers.

In 12 to 24 months from now, we will be talking about the onshoring / re-onshoring of industrial bases of the US, defense, more energy transition.

↩ Return to index

The Brain Damage Associated With People Businesses

Apollo — Marc Rowan

We have not been big proponents of asset manager M&A.

Every one of these asset manager purchases, you probably have to pay twice, both to the equity owners and then to the employees.

We’re growing so fast from originating good transactions that we debate in a negative way the utility of just more of the same as opposed to using excess capital in our business to diversify the business in adjacencies that will provide recurring fee revenue.

↩ Return to index

We’re a Winner, But Not Everybody Has Had That Same Experience

Apollo — Jim Zelter

On equity fundraising headwinds.

It is a tough fundraising environment. We’re fortunate that if you look at our institutional business, we’re basically — have almost double last year’s production through six months... That’s not every GP...

We’re a winner, but we recognize that not everybody has had that same experience.

↩ Return to index

A Lot of People Were Calling for This Massive Calamity

Blackstone — Jon Gray

Answering on what drove the reduction in BCRED withdrawals.

I would say as much as anything, it’s the level of noise has come down. I think a lot of people were calling for this massive calamity. And when the calamity did not occur, I think sort of the press, what you see on TV or Twitter or in newspapers, that has calmed, which before obviously was getting clients understandably nervous.

↩ Return to index

Our Stock Is on Sale Today

Blackstone — Steve Schwarzman

Our stock is on sale today and we believe it represents one of the most inexpensive ways to participate in this extraordinary megatrend.

↩ Return to index

Wealth Flows Could Be More Pro-Cyclical Than People Thought

Ares — Michael Arougheti

The individual investor can sometimes look to divest when they should be investing and running a diversified book in institutional and wealth markets is prudent. I still think it’s early days to know exactly how these will play over time, but there is a risk that some of the wealth flows could be more pro-cyclical than people thought they were, which is why we continue to index aggressively into the institutional market.

↩ Return to index

It’s Not Our Strategy to Aggressively Take Control of Companies

Ares Capital — Kort Schnabel, CEO

As much as we enjoy the higher returns that can often come from those types of situations, it’s not our strategy to go in and aggressively take control of companies from owners of businesses when there’s weakness. We would much rather the owner of the business put in capital and support that company.

↩ Return to index

Refinancing Those Investments Will Be an Important Test for the Market

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

Many loans originated in 2020 and 2021 were underwritten when base rates were near zero, valuation multiples were at peak levels, and the implications of AI were not yet apparent. A meaningful portion of that cohort, especially ARR-based loans, will mature in 2027 and 2028. Refinancing those investments will be an important test for the market.

↩ Return to index

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What Nobody Asked

Ares Capital — Kort Schnabel, CEO

Okay, great. We got through a quarter without any software questions.

↩ Return to index

Are the BDC Redemptions Over?

Blackstone — Jon Gray

[BCRED’s] repurchase requests remained elevated and exceeded the 5% limit, with approximately 50% fulfilled, resulting in net outflows of $1.2 billion... We’ve been here before with BREIT. And while it’s early in the third quarter, redemption requests are down materially.

Apollo — Jim Zelter

When we look at what we were last quarter versus this quarter, acknowledging that it is a bit early in the Q. We’re seeing half the redemption we saw last time. So, I think you’re going to see a dissipation.

Ares — Michael Arougheti

If you were to look at the top 10 redeemers in our non-traded BDC, they were about half of redemption requests. And 2/3 of our Q2 redemption requests were from the Q1 Q. So while the individual investor is slowing its request for redemptions, we’re satisfying the disproportionate demand coming out of Asia. And that number has been cut in half over the last 2 quarters from about $1.2 billion to a little over $600 million... that would probably mean that you get back to stasis in the next 2 to 3 quarters is my guess.

Ares — Michael Arougheti

Redemption requests primarily coming from a small number of non-U.S. family offices and smaller institutions. These types of investors represent only approximately 10% of the vehicles NAV and we intend to make certain adjustments to new share classes that we would offer to them going forward.

Ares — Michael Arougheti

I would expect that when we get to the end of the year, our nontraded BDC will actually be larger at year-end ’26 than it was at year-end ’25.

Blue Owl — Alan Kirshenbaum

In wealth, we believe we have seen a bottoming of evergreen inflows in the May 1 close... And for the July 1 close, we saw a greater than 50% increase in evergreen inflows versus that May 1 close. While we are still below historical levels, we are encouraged by this data.

Blue Owl — Alan Kirshenbaum

For the second quarter in a row, we continued to see 90% of our OCIC fund investors not request a single dollar of redemptions. The small shareholder base that did put in redemption requests remained largely unchanged from last quarter with very limited new participation.

↩ Return to index

Consensus Views

1. Fundraising & Capital Formation

Ares — Michael Arougheti

For the second quarter, we raised approximately $36 billion of gross capital the highest quarter of fundraising in our history.

KKR — Robert Lewin

At our April 2024 Investor Day, we set out a three-year $300 billion fundraising target. Since the beginning of 2024 through June 30th of this year, we have raised $305 billion of capital with $34 billion coming in in Q2. So beating our three-year target in just 2.5 years.

Carlyle — Harvey Schwartz

Our fundraising momentum is exceptional, with $56 billion of inflows over the last 12 months, a 10% increase from the prior year. All this drove AUM to a record $485 billion. As we enter our fundraising super cycle, we’ve already attracted $30 billion of organic inflows in the first half of 2026, another firm record.

Brookfield — Nick Goodman

Fundraising was a record $77 billion during the quarter, reflecting continued strong demand across our flagship and complementary strategies as well as growth.

Blue Owl — Alan Kirshenbaum

We raised $7.8 billion of total capital during the quarter, bringing our last 12-month total capital raising to $50.5 billion, the equivalent of 18% of our total AUM at this time last year. All of this capital raising was organic and nearly 40% of it was raised during the first half of 2026.

↩ Return to index

2. Deployment & Origination

Apollo — Marc Rowan

Origination here was a very strong quarter, $74 billion. Just to give you some perspective, that does not include Broadcom, the largest origination in our sector ever, or a number of others... And so, $50 billion of signed and announced in Q2 will benefit coming quarters. The pipeline has never been stronger

Ares — Michael Arougheti

Our overall investment activity increased meaningfully in Q2 to approximately $36 billion compared to approximately $27 billion in the prior year period. Our firm-wide forward investment pipeline also improved nearly 20% quarter-over-quarter to a new record.

Blue Owl — Alan Kirshenbaum

Our platform expansion has benefited deployment, with Alt Credit deploying nearly $7 billion over the last 12 months, more than double the prior 12-month period, and we’ve seen meaningful deployment expansion for investment-grade credit as well.

↩ Return to index

3. Returns & Performance

KKR — Craig Larson

We had the highest monetization quarter in our history with Realized Performance Income of $848 million and Realized Investment Income of $220 million, which includes $30 million of investment gains generated from our Strategic Holdings segment.

Ares — Jarrod Phillips

Over the last 12 months, we generated gross returns of 16.4% in alternative credit, 8.9% in opportunistic credit, 11.2% in U.S. senior Direct Lending, 8.9% in U.S. junior Direct Lending, 8.3% in European Direct Lending and 19% in APAC credit.

Blue Owl — Alan Kirshenbaum

Last 12-month total returns were 8.3% for Direct Lending and 11.4% for Alternative Credit, comparing favorably to relevant public credit benchmarks over the same period.

↩ Return to index

4. Portfolio Quality, Defaults & Non-Accruals

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

Software is not a monolithic category, and AI exposure is not evenly distributed. The greatest risk is likely concentrated where business model disruption intersects with high leverage, limited free cash flow, and a near or medium-term refinancing need.

Ares — Jarrod Phillips

In U.S. Direct Lending, nonaccrual levels were flat quarter-over-quarter and remain low at less than 2%. We’re not seeing any signs of a turn in the credit cycle as evidenced by 9% year-over-year organic EBITDA growth from our portfolio companies.

Ares Capital — Jim Miller, President

Our non-accruals at cost ended the quarter at 2.4%, still well below our approximate 3% historical average since the global financial crisis, and the BDC historical average of approximately 4% over the same time frame. Our non-accrual rate at fair value of 1.4% also remained well below our historical levels.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

While industry data for non-accruals has been mixed in recent quarters, OCSL’s non-accruals are down approximately 280 basis points from its peak in March of 2025.

↩ Return to index

5. Spreads, Pricing & Market Conditions

KKR — Craig Larson

hyperscaler data center spreads have widened pretty meaningfully just over the last couple of weeks. That stands in contrast to the broader IG markets, which, again, still pretty much remain at their tight.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

During the June quarter, new sponsor-backed first-lien direct loans were pricing in the range of SOFR+ 500-550 basis points, consistent with the March quarter and above the 2025 types of SOFR+ 450-475.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

In this environment, the balance between private credit borrowers and lenders has improved. Competition has generally been more rational, and underwriting standards have strengthened. On average, loans issued in calendar 2026 offer more attractive terms than transactions completed in 2024 and 2025.

↩ Return to index

6. Investment Grade Private Credit & Insurance Demand

Apollo — Marc Rowan

And we have built a dominant IG origination franchise supporting the global industrial renaissance. Our peers are just now discovering that IG is actually a source of growth. We’ve seen this coming, and we’re happy to have led them here.

Blackstone — Jon Gray

In total, we now have 40 clients in our dedicated insurance solutions area, a number which has nearly doubled in the past two years... We’re building something highly differentiated in this channel and have established a massive scale advantage with the combined strength of 40 of the leading insurers in the world — all without taking on insurance liabilities.

Blackstone — Jon Gray

We announced a new partnership with Japan’s largest life insurer, Nippon Life, in which we’ll deploy approximately $10 billion in private credit over the next several years, and also invest in their domestic real estate portfolio.

↩ Return to index

7. Asset-Based Finance & Specialty Lending

Ares — Michael Arougheti

We now manage 4 of the 5 largest institutional ABF funds in the market. We believe that the addressable market is measuring trillions of dollars

Ares — Michael Arougheti

One of the things that differentiates us is our lack of focus and exposure on the consumer part of the market, which I think a lot of our peers spend time because that is your point, a place where you can originate through agreements as opposed to kind of owned origination.

Blue Owl — Marc Lipschultz

Alternative Credit, which is approaching 10% of our Credit AUM, has experienced 35% AUM growth over the past year. During the second quarter, we reached the 1-year anniversary of the inception of our alternative credit interval fund, which has surpassed $2.7 billion in size and has outperformed the leveraged loan index by more than 600 basis points over that period.

↩ Return to index

8. Real Estate, Infrastructure & Data Centers

Blackstone — Steve Schwarzman

We are seeing extraordinary momentum in our data center platform, which has grown to $185 billion of total value, up from $130 billion at the start of just this year. We expect to lease over three times more capacity this year than any other year in our history. If we execute on our pipeline, our data center platform could double over the next few years.

KKR — Scott Nuttall

we’re focused, as a reminder, not so much on investing in what’s going to be the next chip company or the next LLM. It’s more about the opportunities around this development, in particular, from an Infrastructure and Real Estate and Credit standpoint. So, it’s kind of around the space.

Blackstone — Steve Schwarzman

First, we teamed with Google to build a new AI cloud provider powered by their TPU chips, investing up to $5 billion initially. We think this business has the potential to scale quite significantly over time, as the first neocloud for TPUs. Second, we partnered with Anthropic to form a company focused on driving enterprise adoption of their AI-powered solutions.

Brookfield — Bruce Flatt

Our recent $100 billion announcement to build one of the world’s most advanced AI factories in Kentucky, in partnership with the U.S. government, illustrates this well. We were selected by the U.S. Department of Energy to repurpose a federally-owned industrial site and deliver a major world-class AI campus... This is federal land that has DOE uses on it, and as a result, today needs few approvals to move forward.

Ares — Michael Arougheti

Our Ada team, which has long-standing hyperscaler relationships, is currently executing on 7 large data center campuses representing 22 individual data center investments with approximately 1 gigawatt of compute and has a strong pipeline of future projects.

Blackstone — Jon Gray

We definitely see today a global shortage of compute. There’s obviously a lot of dollars being invested, but the dollars are not keeping up with the demand... And I do think ultimately that what that means is those things that are built and operating are worth more.

Brookfield — Nick Goodman

Answering a question on the NVIDIA compute financing platform mobilising around $500 billion.

This is an MoU at this stage that we have signed with NVIDIA pooling together large pools of capital... compute is the critical part of the infra stack supporting AI. Up until now, our business historically largely focused on new build development. Now we’re focused on developing partnerships to finance the chips and accelerate growth with bespoke deals. When you’re building an AI factory, as you know, the GPUs can represent half of the required capital to complete the build. So finding efficient ways to finance the equipment is becoming increasingly important. We’ve been working with NVIDIA closely for the last 18 to 24 months.

BlackRock — Laurence Fink, Chairman and CEO

As you think about these hyperscalers, they went from balance sheet-light companies to major balance sheet needs in building out data centers, building out the infrastructure. They’re looking for strategic partners that can provide them the totality of that relationship. There’s only a few firms that can be doing that.

↩ Return to index

9. Manager Strategy & Platform Growth

Apollo — Marc Rowan

Just for some perspective, Apollo and its peer group, in 2008, roughly $40 billion of AUM. Almost all of us were a $35 billion of private equity and $5 billion of something else. Today, Apollo is closer to $1.050 trillion.

KKR — Robert Lewin

KKR employees also own approximately 30% of our shares. For context, the other companies in the S&P 500 have an average of approximately 2% insider ownership, so it’s that ownership mentality that fundamentally shapes how we think about capital allocation and long-term value creation.

Carlyle — Justin Plouffe

We saw a very attractive opportunity to repurchase CG shares during the quarter. We were active buyers deploying a record $304 million to repurchase or withhold 6.7 million shares. We reduced our adjusted share count by more than 1% this year, with $1.6 billion still remaining on our $2 billion repurchase authorization.

Brookfield — Nick Goodman

we have repurchased approximately $580 million of BN shares in the open market year to date at an average price of $42 per share, keeping us on pace with the repurchases of the last two years...

Blue Owl — Alan Kirshenbaum

We are certainly seeing an inflection point in our business today... We touched on already today quarter-over-quarter sequential growth in our management fees in 3Q and in 4Q. We see the growth rate for management fees higher in 2027 than in 2026... So look, generally, we’re pretty sober about where we are today in the last 6 or 8 months. We are optimistic about growth increasing as we go from here.

Oaktree Specialty Lending — Armen Panossian, CEO and Co-CIO

In an environment where traditional sponsor-backed middle market activity remains subdued, the ability to source beyond U.S. sponsor-backed direct lending becomes increasingly valuable.

Blue Owl — Marc Lipschultz

Today, Direct Lending is approximately 35% of our AUM compared to nearly half of our AUM just 2 years ago.

↩ Return to index

10. Wealth, Retail & 401(k)s

Apollo — Marc Rowan

The world is short, guaranteed lifetime income. The populations are aging. Almost no one else offers guarantees. The global investor renaissance is giving us long-dated fixed income to support these guarantees. We should be giants straddling the financial world.

Apollo — Jim Zelter

The last 11 quarters in the non-traded BDC space, the dispersion of managers was about 1% from top to bottom. The last two quarters, 4% and 2.5%, and we were in the top quartile.

KKR — Scott Nuttall

K-Series is built to be able to go to the accredited investor in the U.S., which is $1 million and up in net worth. That is a single-digit percentage of U.S. households. The other 90-plus percent of K-Series is not relevant to today. And so that’s where our partnership with Capital Group comes in because we want to further extend our reach and our distribution relationships, and they have relationships with 220,000 of the 300,000 advisers in the United States. If we spend another 50 years at KKR, I’m not sure we could build that kind of relationship and trust with that kind of penetration.

Carlyle — Harvey Schwartz

We generated over $7 billion in gross sales across evergreen wealth over the past year, driving AUM in these strategies to a record $20 billion. That’s up more than 60% year-over-year.

↩ Return to index

11. M&A, Consolidation & Secondaries

Apollo — Marc Rowan

As you know, from prior quarters, we have not been big proponents of asset manager M&A... We’re growing so fast from originating good transactions that we debate in a negative way the utility of just more of the same as opposed to using excess capital in our business to diversify the business in adjacencies that will provide recurring fee revenue.

Carlyle — Harvey Schwartz

there’s a secular shift here, which we’ve talked about before, which is really about how these businesses are truly now corporate finance solutions providers. If you went back several years, it was really about the secondaries business, which was really more a point-to-point business in some respects. Now our dialogue around the world with GPs and LPs is really about portfolio repositioning, how to think about the optimized portfolio, how do GPs create value for themselves and grow their businesses.

BlackRock — Laurence Fink, Chairman and CEO

These are just latest examples of BlackRock’s successful M&A approach. We acquire capabilities our clients are in need of, we integrate them onto and into our global platform, and we scale them faster than they could have scaled on their own.

↩↩ Return to index

Thanks again for reading. Let me know if you find these posts useful or how I can improve it for next quarter.

Share this with your Investor Relations Colleagues.

This newsletter is for education or entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

• Ares: Private credit’s returns have outperformed leveraged loans in 16 of the past 20 years. Link

• The Federal Reserve Bank of New York launched a U.S. direct lending survey. Participation will be voluntary, and participant criteria is available here.

Manager & LP Updates

• BlackRock sold half of its BDC’s debt portfolio to a continuation vehicle backed by Pantheon. Link

Read Accredited Investor Insights post for the full breakdown.

• HPS led a £550m financing to Aston Martin secured against its branding and naming rights. Bondholders threatened legal action, believing Aston Martin had moved assets out of their pool of collateral. Link

• Jane Street is looking to refinance $11 billion of existing public-market debt into a large private credit facility. The transaction would replace its current mix of bonds and syndicated loans with private credit provided by a small group of lenders, reportedly including Pimco. The move would give Jane Street more flexibility over its capital structure, potentially provide additional funding for trading and AI, and reduce the amount of financial information it has to disclose to a broad group of public bond investors. Link

• Brookfield: How specialization can provide an investment edge in private credit. Link

Apollo: The AI Buildout Is Reshaping Credit Markets

Apollo published its take on how private credit can support the AI buildout alongside public markets. See my key takeaways below

👉 Read the full report here

Hyperscaler Annual Capex Could Exceed $1 trillion in 2027

• Unlike previous technology cycles, which were largely asset-light and financed through venture capital, public equity, and internal free cash flow, AI requires sustained investment in chips, servers, data centers, and power.

• Hyperscalers will account for a large share of this spending, but they will not finance the buildout alone.

AI-related debt accounts for nearly 40% of longer-duration bond supply

• Strong operating cash flow will fund a meaningful portion of this investment, but not all of it. No single financing market will be large enough to meet these needs. Apollo expects Public IG to finance only a fraction of the capital required.

• Amazon, Alphabet, SpaceX, Meta, Oracle, and Nvidia have issued about $220 billion of debt this year alone.

Hyperscaler spreads have more than doubled since the middle of 2025

• New issues have required greater price concessions, and several long-dated transactions have widened meaningfully since issuance.

• Apollo views this as a supply-driven repricing rather than a sign of weaker credit fundamentals.

• Public markets are being asked to absorb an unusually large volume of long-dated issuance from a relatively small group of borrowers.

Public IG Capacity Is Constrained by Concentration and Ratings

• Hyperscalers are already becoming significant components of IG benchmarks. Additional borrowing would increase both single-name and sector concentration.

• Ratings may provide another constraint. Although some issuers could borrow substantially more while remaining below 2x leverage, doing so could result in multiple-notch downgrades, increasing financing costs, and reducing demand from ratings-sensitive investors.

• The gap between fundamental borrowing capacity and public-market capacity creates a substantial role for private credit.

The existing AI ecosystem could support more than $2 trillion of additional IG debt

• Public IG markets may be able to absorb less than $1 trillion through 2030

• The gap between borrower capacity and public-market capacity creates a substantial role for private credit

• Private IG will likely provide more than $1 trillion of this financing

👉 Learn more in Apollo’s Mid-Year Outlook Report

Pitchbook US Private Credit Monitor

YTD volume and deal count are tracking behind last year’s pace

Spreads are up 5% YoY. The 450–499 bps range dominates the new-issue LBO spread distribution

The BSL - direct lending spread gap widened to 166 bps, up 7 bps from Q2

👉Read Pitchbook US, Private Credit Monitor

💰Fundraising News

Bridgepoint’s $5.9bn Direct Lending IV

Bridgepoint, a London-based asset manager, raised $5.9 billion for the final close of Bridgepoint Direct Lending IV. The fund senior loans to mid-market companies across Europe. It is already more than 40 percent invested across over 20 borrowers.

👉 Private Equity Wire Announcement

Comvest’s $5.4bn Fund VII

Comvest Credit Partners, a West Palm Beach-based direct lender, announced a final close of $5.4 billion for its Credit Partners VII. The fund invests across both cash flow and asset-based lending opportunities for sponsored and non-sponsored middle-market companies, allocating between the two as relative value shifts. It is the largest raise in the platform’s history and the first since the manager was acquired by Manulife.

👉 Comvest Announcement

Willow Tree Credit Partners’ $730m Continuation Fund

Willow Tree Credit Partners, a New York-based direct lender, closed a $730 million private credit continuation vehicle led by HarbourVest Partners. The vehicle holds a portfolio of approximately 130 positions, primarily first lien loans to sponsor-backed companies, moved out of Willow Tree Fund II, a late 2020 and early 2021 vintage. Existing limited partners were given the option to take liquidity or roll their exposure into the new vehicle. Evercore advised on the transaction.

👉 PR News Wire

LGT Capital Partners Secondary Fund Launch

LGT Capital Partners, a Switzerland-based private markets manager, launched its debut credit secondaries strategy. The strategy will invest in LP-led, GP-led, and opportunistic transactions with an emphasis on senior lending. LGT manages more than $5 billion of private credit assets on behalf of the LGT endowment and external clients, spanning direct lending, bank loans, NAV loans, structured credit, subordinated lending, and specialty finance.

👉 LGT Announcement

Macquarie AM’s Infra Credit BDC

Macquarie Asset Management, a Sydney-based asset manager, launched its Infrastructure Income Opportunities BDC. Target sectors include transportation leasing platforms, specialist environmental and waste services, energy transition assets such as battery storage, education facilities, and emergency services.

👉 ACI Announcement

Vistara Growth’s Structured Opportunities Fund

Vistara Growth, a Vancouver-based technology lender, launched the Vistara Growth Structured Opportunities Fund with a $500 million target, anchored by Beedie Capital with a commitment of up to $125 million. The evergreen fund provides growth debt and equity capital to mid to later stage technology companies across North America. Beedie Capital has simultaneously acquired a 50 percent ownership stake in Vistara, having been one of its first limited partners in 2015.

👉 Vistara’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render. Read it online

📕 Reads of the Week

Market Updates

Have critics focused on the wrong credit boom?

FINRA margin debt reached $1.4 trillion in May 2026, up 54% YoY and more than double since January 2022.

Leveraged ETFs also continue to grow, with U.S. leveraged ETFs having more than quadrupled since 2022.

Explosion in Stock Market Leverage

👉 Carlyle: Have critics focused on the wrong credit boom?

👉 Pimco: Leverage in the system is rising

Speaking of leverage, posted a great piece on the downfall of Leopold Aschenbrenner’s Situational Awareness fund

👉 The downfall of Situational Awareness

Have Bonds stopped working as a shock absorber?

In the Global Financial Crisis, equities fell 57%, and bonds fell 13%. In the COVID crash, equities fell 34%, and bonds fell 15%. Bonds have historically absorbed equity market shocks.

In 2022, equities fell 25%, and bonds fell 24%. The diversification that underpinned 40 years of portfolio construction broke down completely.

👉 Carlyle: Rethinking Fixed Income’s Anchor

Asian private credit fundraising falls to 12-year low

Fundraising by Asian managers has fallen to its lowest level in more than a decade. Only five private credit funds based in Asia closed during the first half of 2026, raising a combined $1.2bn. That compares with 29 funds raising $9.5bn in 2025 and 53 funds securing $20.2bn in 2022.

If the pace of fundraising continues through the second half of the year, 2026 would be the weakest year for Asian private credit fundraising in at least 12 years.

👉 FT Article

Proskauer’s Private Credit Default Index Falls to 2.51%

In companies with EBITDA of less than $25 million, Proskauer observed a modest decrease from 2.3% in Q1 2026 to 1.9% in Q2 2026.

For those with EBITDA of $25 million to $49.9 million, Proskauer observed a modest increase from 3.1% in Q1 2026 to 3.4% in Q2 2026.

Companies with EBITDA equal to or greater than $50 million decreased to 2.4% in Q2 2026 from 3.0% in Q1 2026.

👉 Proskauer Announcement

Manager & LP Updates

Ares explores €3bn secondary sale in its European direct lending fund

The sale relates to €3bn of LP interests in its Ares Capital Europe IV direct lending strategy. If completed, it would rank among the largest private credit secondaries deals completed to date. Talks remain ongoing and may not result in a transaction.

Ares has been an active participant in the sector from both the buyer and seller perspectives. Earlier this year, the firm completed fundraising for its inaugural private credit secondaries strategy, securing $7.1bn of commitments.

👉 PE Wire Report

HSBC sells $25 billion Australian home and personal loan portfolio to Blackstone

The deal announced by the two companies on Friday is reportedly the world’s largest-ever home loan portfolio transaction. The portfolio will be held across the Blackstone Credit and Insurance, Tactical Opportunities and Real ​Estate Debt Strategies funds

👉 Blackstone Announcement

Partnership Updates

PGIM acquires full ownership of Deerpath Capital

PGIM has agreed to acquire the remaining 25% interest in Deerpath Capital, bringing the firm’s ownership to 100%. The acquisition will strengthen PGIM’s direct lending platform by adding Deerpath’s lower middle market capability to PGIM’s existing core middle market and large cap capabilities. The combined businesses will have $16bn in AUM across a team of 55 investment professionals.

👉 PGIM Announcement

T. Rowe Price and Goldman Sachs Asset Management launch a Private Markets Interval Fund.

The new interval fund combines T. Rowe’s private equity with GSAM’s alternatives platform and private credit expertise of Oak Hill Advisors, the private credit platform of T. Rowe Price.

T. Rowe Price and GSAM intend to deliver a range of public-private investment solutions over the coming years

👉 T. Rowe Announcement

3 Insights on 2Q Earnings

Managers have begun releasing their 2Q earnings. Here are a few early takeaways, with more to come as Apollo, Brookfield, Oaktree, and Carlyle report this week.

Ares Grew Its Credit Book Nearly Twice as Fast as Blue Owl

• The four managers grew their credit AUM by nearly $200 bn over the last year.

• At its current pace, Ares would add more credit AUM over the next two years than Blue Owl manages today.

Ares Deployed Nearly As Much as KKR, Blackstone, and Blue Owl Combined

• Ares’ deployment primarily consisted of $12.4bn in U.S. direct lending, $4.4bn in alternative credit, and $4.2bn in European direct lending.

• Blue Owl’s direct lending deployment declined nearly 70% compared to 2Q last year.

Direct Lending Is Losing Share, Not Volume

• Direct lending still raised more capital than any other credit strategy at both Blackstone and Ares this quarter. Blackstone raised $13.3bn for global direct lending, and Ares raised $12.3bn across its US and European strategies.

• Blue Owl shows this trend most clearly: Direct lending has nearly tripled in dollar terms since 2021 and has still lost six percentage points of AUM share.

💰Fundraising News

Slate’s $1 billion Senior Lending SMA

Slate Property Group, a New York manager, closed a $1 billion SMA to expand its senior lending platform. The fund will originate lower-leverage senior secured residential construction and bridge loans through the vehicle, running alongside its SCALE Lending strategy. The SMA targets loans from $40 million to $200 million, priced 300-400 basis points over SOFR, filling a gap below Slate's traditional 500-650 basis point platform.

👉 PERE Report

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

After nearly three and a half years of writing The Credit Crunch, I finally achieved a major breakthrough: my wife was genuinely impressed by one of my newsletters.

Two weeks ago, I wrote about Apollo’s memorable “Don’t mistake the sprinkle for the cupcake” campaign. Apollo’s team followed up with the most convincing piece of marketing yet: a box of cupcakes for me and my friends.

Not wanting to get carried away, but if there is any read-across here, I may have to start writing about private jet finance and see whether Apollo can persuade Perseus Aviation to send a little something my way.

Reading on Outlook? The charts won’t render - Read it online

📕 Reads of the Week

Market Updates

Private Credit's Much Warranted Reset: Three Lies and a Truth

It’s great to see join the Substack community.

As expected, his first post is definitely worth reading.

👉 Private Credit’s Much Warranted Reset

Private Credit Leads the Next Wave of Institutional Allocations

Aviva’s 2026 private market study taps into the views of 500 institutional investors managing $6.5 trillion in assets.

Nearly half of these investors plan to increase private market allocations over the next two years. Infrastructure and Private credit stand out as the asset classes with the strongest net increase intentions.

Real estate shows the weakest allocation momentum. The gap between those investors planning to increase exposure versus those intending to reduce is small, reflecting the impact of higher interest rates, valuation resets, and structural challenges.

👉 Aviva’s Private Market Study

Borrower Defaults Remain Below the Long Run Average

Borrower defaults across the direct lending market remain low at roughly 2.0%, below the historical long-term average of 2.7%.

👉 Blue Owl’s Mid-Year Outlook

Manager & LP Updates

Cox Capital Announces Three BDC Tender Offers

Cox Capital launched a tender offer targeting investors in HLEND, ADS, and ASIF.

Cox is initially looking to acquire $30.5 million, at discounts of 15% to 30% to each fund’s reported Class I NAV as of May 31, 2026.

“Repurchase demand ran well ahead of issuer program capacity again last quarter, and we believe the industry needs a standing utility for the unfilled remainder. For a holder seeking full liquidity, the practical arithmetic is a blended exit: shares accepted by an issuer program are repurchased at or near net asset value, remaining shares can be sold to us.”

John Cox, Chief Executive Officer and Chief Investment Officer of Cox Capital Partners

It’s important to flaf these offers are very small relative to the total universe of investors in these funds. For context, the three funds hold roughly $38–40 billion in aggregate NAV, making the $30.5m tender about 0.1% of the combined NAV.

👉 Cox Capital’s Press Release

BlackRock’s $12Bn Meta Deal

BlackRock is preparing a debt sale of more than $12 billion to help finance a Meta data center project. The transaction combines investors from Global Infrastructure Partners and HPS Investment Partners, who are reportedly offering a single tranche of notes due in 2048, priced at a premium of about 2.875 percentage points over Treasuries (~7.1% all in).

Proceeds from the sale will fund a 1 GW data center campus in El Paso, Texas.

👉 Announcement 1 and Announcement 2

AustralianSuper targets $20bn private credit portfolio

AustralianSuper’s plans to double its private credit portfolio to $20 billion within four years.

As more members move into decumulation, super funds need to think about how portfolios deliver more predictable income streams and support members throughout retirement.

Against that backdrop, AustralianSuper has broadened its approach to credit investing by bringing private credit into its wider fixed income portfolio, allowing investment opportunities to be assessed across public and private markets rather than in isolation.

👉 AustralianSuper News

TD Asset Management launches its global private credit strategy

The fund is integrated into the TD Greystone private markets platform that manages $30 billion of assets. It invests in direct lending (middle market corporate credit), real estate debt, infrastructure debt, and specialty finance markets. It will target an unlevered yield of an 8% to 10%.

👉 TDAM Announcement

Partnership Updates

Wellington, Vanguard, and Blackstone Launch All-Private Fund

The partnership provides Merrill and Bank of America Private Bank clients with a simple access point to Blackstone’s perpetual private markets platform. This includes private credit, private equity, private infrastructure, and private real estate, in a single allocation. They will also explore additional distribution opportunities across the wealth ecosystem over time.

👉 Blackstone announcement

Evercore: Credit Secondaries Are Accelerating

I’ve written about the credit secondaries already this year (Link), but Evercore has since published some excellent data on how this year is playing out.

Below are my key highlights.

👉 Read Evercore’s Full Report

GP-led pricing has held firm,

GP-led transactions continued to price at ~99% of FMV on average, supported by greater access to information, direct sponsor engagement and increased buyer confidence in the ability to underwrite borrower-level performance.

While buyers became more selective during periods of volatility, competition for high-quality, senior-secured portfolios remained strong.

GP-led Credit Secondary Transaction Pricing

(% of FMV Before Post-Reference Date Cash Flow Adjustments)

LP-led Credit Secondary Transaction Pricing

(% of NAV Before Post-Reference Date Cash Flow Adjustments)

The majority of available capital is focused on senior

Buyers typically target 10%-15% levered net IRRs (with transactions generally levered at or around 50%+ LTV).

Second Lien / Mezzanine and Opportunistic strategies target progressively higher returns.

Buyer Target Returns by %

BDC Rising Redemptions Have Yet to Translate into Secondary Sales

Redemption requests have increased more than sixfold since 3Q25

Elevated redemption requests have not yet resulted in meaningful secondary market activity. (See Cox’s Press Release for $30m or 0.1% of BDC Persistent redemption pressure could therefore create additional secondary opportunities over time.

Default rates have remained relatively stable with historical norms

👉 Read Evercore’s Full Report

💰Fundraising News

Tikehau’s $6 billion European Direct Lending VI

Tikehau Capital, a Paris-based alternative asset manager, closed its $6 billion European Direct Lending VI. The strategy has already completed 30 transactions and realised four exits, generating double-digit returns, and is already 44% deployed. The portfolio has an average net debt to EBITDA of 3.5x.

👉 Tikehau’s Announcement

GoldenTree $2.75 bn Fund II

Goldentree, a New York-based manager, closed its $2.75 billion Private Credit Fund II. The Fund has already deployed close to 40% of commitments across approximately 50 investments and is delivering a net IRR of over 20%.

👉 GoldenTree’s Announcement

GCM Grosvenor $1.2 bn Credit Secondaries

GCM Grosvenor, a Chicago-based alt manager, closed its inaugural $1.2 billion Credit Secondaries Fund. The strategy focuses on opportunities across credit sub-strategies, with a particular focus on opportunistic corporate and asset-backed investments.

👉 GCM Grosvenor’s Announcement

NXT Capital $1.8 bn Capital Senior Loan Fund VIII

NXT Capital, a Chicago-based lender, announced a first close of $1.8 billion for its eighth direct lending fund. It finances sponsored middle market companies with earnings of $5 million to $50 million.

👉 NXT Capital Announcement

Dignari Capital Partners $500m from ADIA

Dignari Capital Partners, a Hong Kong private credit investment manager, raised $500 million from ADIA for its APAC real estate private credit strategy. The strategy invests in real estate opportunities in residential, office, retail, student accommodation, serviced apartment, co-living, data centers & logistics.

👉 Dignari Capital’s Announcement

Mercia $580 million UK Real Estate Development Debt Fund

Mercia Asset Management, a UK-listed, multi-asset investment manager, is raising up to $580 million for its UK Real Estate Development Debt Fund. The fund provides institutional investors with access to a specialist private credit strategy focused on UK industrial and logistics developments. The fund will finance experienced real estate developers with secured loans and will focus on opportunities within the industrial and logistics markets.

👉 Mercia’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Reading on Outlook? The charts won’t render - Read it online

📕 Reads of the Week

Market Updates

Green shoots in the exit market

After three years of offloading assets below book value, Partners Group believes that sponsors are back to exiting companies at a premium to what remains in their portfolios. History suggests this is an early-cycle signal rather than a peak, the last two times the uplift turned positive, exit conditions improved for up to 7 years afterward.

👉Partners Group: 2026 Mid-Year

KKR: Base rates are driving fixed-income returns

KKR’s 5-year expected returns building blocks show that returns are predominantly driven by higher base rates, especially for Investment Grade exposures. KKR believes that investors should focus on high-grade credit, durable cash flows, and portfolio construction discipline, rather than reaching indiscriminately for yield or duration.

👉 KKR: An Expanded Toolkit for the Next Investing Regime

European direct lending had its weakest quarter in two years

Direct lenders funded twice as many buyouts as syndicated lenders by count. Direct lending spreads fell to 503 bps. Professional & Business Services displaced Technology as the biggest driver of new deal activity in the YTD.

👉 Pitchbook’s European Credit Monito

9fin’s European Private Credit Rankings

👉 S9fin’s European Rankings here

Hamilton Lane: The Rise of Opportunistic Credit. 👉 Read the paper

Manager Updates

Apollo is investing in Mexico

Apollo plans to deploy up to $20 billion in private credit opportunities in Mexico. It is reportedly in discussions over financing a range of infrastructure developments as well as other debt transactions. More here

👉 Coverage on Private Equity Wire

BCIs Investment Grade Fund.

British Columbia Investment launched its Investment Grade Private Credit Fund. The fund launched with $1.8 billion in direct co-investment commitments and a deployment target of $13 billion over three years. The fund includes investment-grade corporate credit and asset-backed financing, with a primary focus on North America and Europe. More here

👉 BCI’s Announcement

Partnership Updates

Nuveen x CalSTRS

Nuveen announced a strategic partnership with CalSTRS to invest up to $2 billion in sustainable infrastructure through Nuveen’s Energy Infrastructure Credit business. CalSTRS will serve as an anchor investor for the sustainable infrastructure portfolio in the Energy & Power Infrastructure strategy.

👉 Nuveen’s Announcement

Arrow Global in Italy

Arrow Global, a UK-based alternative manager specialising in private credit and real estate, announced the acquisition of Borio Mangiarotti, a leading Milan-based real estate development and management business. Founded in 1920, Borio Mangiarotti has played a significant role in shaping Milan’s urban landscape, with more than 500 completed buildings mainly across Lombardy.

👉 Arrow’s Announcement

Marsh: Private Credit is Insurers’ Defining Allocation Theme

Marsh surveyed 123 insurers around the world, representing over US$4 trillion in total investment assets.

Below are my key highlights.

👉 Read Mercer’s Full Report

More than half of insurers expect to increase private credit exposure over the next 12-24 months

This was a sharp contrast to their 2024 survey, when 37% of insurers reported plans to increase allocations to core fixed income, while just 32% intended to increase their allocation to investment-grade private debt

Private credit demand outstripped fixed income for the first time ever

Interest in private credit is even more pronounced at the larger end of the market, with 81% of insurers with more than US$25 billion in assets under management, planning to increase allocations to private credit compared.

Life insurers (73%) were more likely to allocate than Health (56%) and P&C (40%).

Despite the short liability profiles of Health/P&C players, private credit interest was robust and on par with public investment-grade fixed income.

North American insurers are more likely to allocate to IG Structured Credit (48% of US and 42% of Canadian insurers versus 33% and 23% for European and the UK, respectively), which is unsurprising given the maturity of structured finance markets and conducive regulatory regimes.

Insurers’ concerns about the asset class reflect a broader focus on where the market is in the credit cycle.

A reduction in the illiquidity premium and a weakening in credit discipline are the most prominent concerns, followed by fears of higher default rates.

The market opportunity remains attractive, but selectivity across manager selection and deal due diligence are of the utmost importance.

Beyond credit fundamentals, there is a second tier of concern around regulation, valuation, and the health of adjacent private equity markets. AI disruption seem to be viewed as longer-term issues, rather than immediate barriers to allocation.

👉 Read Mercer’s Full Report

🏃‍♂️Couch 2 Jon Gray

One of the unintended consequences of becoming a dad is that I’ve also acquired a dad bod.

So I’m fixing it.

I’ve started Couch to Jon Gray, the unofficial running club of private credit. The goal is simple. Get fit enough to keep up with Jon Gray.

If you're in private credit and looking for an excuse to run a little more consistently, join us. It doesn't matter whether you're training for your first 5K or your next marathon.

👉 Join Couch to Jon Gray on Strava →

Workouts don’t require creditor consent.

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💰Fundraising News

Sagard $1bn Credit Partners III.

Sagard, a Canadian alt manager, held a first close of $1 billion for its Sagard Credit Partners III. The fund lends senior loans to mid-market companies across Canada and the U.S., focusing primarily on non-sponsored companies. Since inception, Sagard Credit Partners has deployed over US$1.9 billion.

👉 Sagard’s Announcement

IPF $275m Fund IV

IPF, a European Healthcare Growth Debt provider, raised $275 million for its fourth fund. The fund focuses on senior and unitranche debt across European healthcare businesses. IPF typically lends between €10–25 million per company.

👉 IPF’s Announcement

Creation Capital $190m Listed Fund

Creation Capital, a South African investment firm, launched the Creation Yield Fund, a listed private credit vehicle targeting $190 million. The fund was listed on the Cape Town Stock Exchange on 15 July. It will invest in SMEs through non-bank financial lenders.

👉 Creation Capital’s Announcement

Tailwater Capital $170m Royalties Fund

Tailwater Capital, A Dallas-based Energy and Infrastructure manager, announced a final close of $170 million for its second Royalties Fund. The strategy acquires mineral and royalty interests across Tier 1 U.S. shale basins. Roughly half of the capital has been deployed across 30 Permian Basin transactions.

👉 Tailwater’s Announcement

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

Apollo: Don’t mistake the sprinkle for the cupcake.

You may question Apollo’s market sizing numbers, but its marketing is memorable.

👉 Learn how Apollo aims to lead with investment-grade private credit.

📕 Reads of the Week

Market Updates

• Ares on Real Estate

  • “For the first time in a while, mainstream commercial property looks ‘cheap’ on an income basis, relative to most other major asset classes.

  • Not every commercial building screams “bargain.” Yet at the portfolio level, prices have dropped far enough for investors to feel more confident about the risk/reward profile — particularly in sectors with stabilizing fundamentals and falling supply.

  • That distinction matters for those who worry about “trying to catch a falling knife.” In much of the market, the knife is just sticking up out of the floor, waiting for someone to get the handle.

  • 👉 Read the full report

• Avoiding SaaSpocalypse is an underwriting skill for lenders

  • Headline software exposure numbers are becoming less useful on their own.

  • Two private credit managers may report identical software allocations while holding radically different underlying risks depending on the durability of the businesses they finance.

  • 👉 Read more here

• Pimco estimates that $5 trillion in total AI-related capex is expected by 2030.

  • ~40% may need to be financed through debt markets.

  • Demand has been so strong that one lender described it as a “food fight.” 🍔

  • 👉 Learn more

• The weakening of maintenance covenants in private credit

  • An analysis of over 2,000 private credit agreements shows that more than a third of borrowers with maintenance covenants carry headroom exceeding 40%.

  • Not because they have deleveraged, but because covenants were set wide at origination to win mandates in a competitive deployment environment.

  • 👉 Read Allianz’s Fallen Angels report here

Manager Updates

• Mubadala is opening its private credit platform to external investors for the first time as it seeks to attract institutional capital.

  • Mubadala will transfer a $25 billion credit portfolio to Mubadala Capital, allowing the investment business to raise third-party funds alongside capital from its parent for the first time.

  • Mubadala will also commit an additional $4.65 billion to support the platform’s continued expansion.

  • 👉 More here

• HSBC pulls back from private credit. Link

• Temasek will double its private credit allocation by 2031

  • 👉 Read Temasek’s 2026 Strategy Review

2026 Private Credit Rankings

PERE’s Inaugural Credit 100

Infrastructure Investors’ Debt 30

Subscribe now

💰Fundraising News

• Arctos, a KKR-owned manager, closed its $6.2 billion Keystone Partners Fund I. The Keystone platform offers flexible, non-dilutive capital solutions for GPs across private markets and will target relationships with sponsors in North America and Europe. To date, more than 30% of the Fund’s capital has been deployed across 11 sponsors. This includes Keystone’s backing of Hayfin’s management buyout from British Columbia Investment Management Corporation. More here and here

• BlackRock held a first close of $1.7 billion for its European Middle Market Private Debt Fund II. The fund will finance European mid-market companies in defensive industries such as healthcare, business services, and software/technology. More here

• Santander Alternative Investments, the alternatives asset manager of Santander Bank, announced a first close of $170 million for its second Asset Backed Corporate Lending Fund. The fund provides asset-backed corporate financing to SMEs across Europe. The fund is targeting a total raise of €500 million, with a final closing scheduled for June 2027. More here

• Accession Capital Partners, a Poland-based manager, held a first close of ~$100 million for its first direct lending fund. ACP Credit will focus on high-growth small- and medium-sized companies in Central Europe. It will lend between €5-15 million per deal of senior-secured debt. The fund, which has a target of up to €200 million. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• Accredited Investor Insights: Blue Owl vs Oaktree - A Tale of Two Redemption Queues. Read here

• Sovereign funds move from public markets to private credit. Read the FT article

• Rithm Capital: Banks did not exit corporate lending. They repositioned inside it. Link

• Churchill: Mid-market fundamentals are sound. Focus on the fundamentals. Link

• Hamilton Lane: Private credit has consistently outperformed public credit

Direct lending capital is becoming more concentrated and increasingly centered among a smaller group of large, established platforms.

• 👉 Read Baring’s report on Direct Lending here

Manager Updates

• Why Apollo Created Their Onchain Credit Fund. Link

• Apollo: Increasing Transparency and Tradability in Private Credit. Read here

• Ares Alt Credit has over $57 Billion in AUM, with over $85 Billion deployed since inception and $12.7 Billion invested over the last twelve months alone.

  • 👉 Read more here

Partnership Updates

• Coller Capital and Cherry Bank announced a distribution partnership to provide Italian wealth investors access to private credit secondaries. Link

BDC Updates

“Show me the incentive, and I will show you the outcome.” The FT’s deep-dive into Thoma Bravo’s Medallia acquisition. Link

BDC’s Q2 Redemption Wrap Up

Q2 is largely behind us, and most of the largest non-traded BDCs have reported their redemption requests received. Below is a summary of the insights from the quarter.

The headline

• Investors asked to withdraw ~$24bn across the 15 funds we track (See below)

• Sponsors paid ~$8bn

• Aggregate requests rose sharply. Q1 2026 saw roughly $13.9bn requested across the NAV-BDC landscape, with about $7.4bn honored.

Requests were worst at the biggest funds

• Median requests were ~10% of NAV, but the asset-weighted average was 13.5%; pressure is concentrated in the largest vehicles.

• Cliffwater (17%), Blue Owl OCIC (18.8%), Apollo ADS (16.8%), and HPS HLEND (13.3%) received worse than average requests.

All managers capped redemptions

• Unlike Q1, all managers capped the redemption payouts 5%, calling it “operating as designed.”

The most-stressed funds eased

• Blue Owl OCIC (21.9%→18.8%),

• OTIC (40.7%→38.1%),

• Oaktree OSC (8.5%→4.5%)

Brookfield: Seeking Resilience in Turbulent Times

Brookfield published its quarterly outlook to explain how investors can navigate private credit during this market volatility. Below are the key takeaways.

👉 Read Brookfield’s Full Report Here

Non-Accruals in BDCs Remain Low

• Private credit sentiment has shifted from enthusiasm to caution.

• The current market is a consequence of company-specific issues and underwriting standards, not a fundamental break in the system.

• This explains why the dispersion of returns is increasing across lenders, sectors, and vintages.

While PIK Usage Is a Concern, Levels Are Stabilizing, and Non-Accrual Rates Remain Low

• While PIK activity, particularly PIK introduced through amendments, can be a sign of credit deterioration, usage has stabilized recently as borrowers’ ability to pay cash interest is improving.

• Market stress has been more pronounced among smaller and middle-market borrowers, particularly companies in the $25–50 million EBITDA range, while larger issuers have generally remained more stable.

Direct Lending Spreads Remain Attractive

• One of the inevitable consequences of a market dislocation is that it creates opportunities in distressed assets, and this is no exception.

• This is particularly evident in sector-specific areas that have borne the brunt of negative sentiment, but is also a result of refinancing pressure.

• More than $1.3 trillion in loans are maturing in 2026; public markets are likely to absorb much of this volume, but may be less receptive to more complex credit situations, creating opportunities for private lenders

There are four key themes driving the private credit outlook over the next few months

1. Dispersion is key. There will be increased dispersion among private credit manager returns. To put it simply, this is a credit pickers’ market.

2. Yields remain attractive. The private credit premium—in other words, the return relative to public credit investments—has compressed in recent months, but it has not disappeared. Yields remain compelling relative to public markets.

3. Selection-driven returns. Performance will increasingly depend on a strong focus on borrower quality, underwriting discipline, and the structuring and sourcing of loans. Direct lending is and remains a core allocation of investors’ fixed-income portfolios, but sustained performance will come from lenders that emphasize selectivity and disciplined underwriting, with a focus on risk mitigation.

4. Opportunities are emerging. One of the inevitable consequences of a market dislocation is that it creates opportunities in distressed assets, and this is no exception. This is particularly evident in sector-specific areas that have borne the brunt of negative sentiment, but is also a result of refinancing pressure. More than $1.3 trillion in loans are maturing in 2026; public markets are likely to absorb much of this volume, but may be less receptive to more complex credit situations, creating opportunities for private lender.

👉 Read Brookfield’s Full Report Here

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💰Fundraising News

• Hayfin, a UK-based manager, closed its $17.2 billion Direct Lending Fund V. The fund lends senior‑secured loans to European middle‑market and upper‑middle‑market businesses. Since it was founded in 2009, Hayfin has invested over €55bn of capital across more than 500 portfolio companies via its private credit strategies. More here

• Ares is raising its second Asia private credit fund focused on financing leveraged buyouts across the Asia Pacific. The fund, Asia Direct Lending II, could reportedly be larger than its predecessor, which raised $1.7bn, although final details have not yet been set. More here

• RGreen Invest, a Paris-based manager, closed its $572 million Infrabridge IV fund, more than doubling the size of its previous vintage. The infrastructure debt fund provides short-term senior debt/bridge financing to energy-transition infrastructure projects in Europe, focusing on the lower-mid market. Its portfolio spans a broad range of sectors, including geothermal energy, biomethane, energy storage, hybrid solar and wind projects incorporating battery storage. More here

• Incus Capital, the Madrid-based real assets private credit specialist, announced a second close of $640 million for its European Credit Fund V. The fund provides asset-backed financing to mid-market businesses across Europe. Investments completed to date include financing for prime residential development projects, logistics assets, the hospitality industry, energy transition infrastructure, and residential repositioning opportunities. The fund typically lends between €25 million and €60 million per company. More here

• Eiffel Investment, a Paris-based manager, announced the first closing of $570 million for its Impact Debt III. The fund provides financing to European mid-sized companies, where the capital is used to support one of three impact objectives: reducing temperature impact, preserving ecosystems, or promoting diversity. It will invest in 40 to 50 European companies. More here

• Orbit Capital, a Czech Republic-based manager, announced a second close of $122 million for its second Growth Debt Fund II. Orbit Capital is a growth-stage investor managing over €200 million in AUM through venture debt and growth equity vehicles. The firm has a primary focus on technology leaders in CEE, while remaining actively engaged in opportunities across the DACH region and broader European markets. Tickets range from €3 million to €15 million. More here

• TLG Capital, a London-based emerging markets manager, announced the $120 million second close of its Africa Growth Impact Fund II. The fund finances African SMEs through local banking partners, with each loan structured for a longer tenor than African banks typically provide and backed by a guarantee from the originating bank. Since its $75 million first close in April 2025, the fund has invested in nine SMEs across seven countries and seven sectors, with debt facilities ranging from $5 million to $15 million. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

That line from Ares’ Alternative Credit is one I often think about when writing these quarterly pieces.

It’s easy to get pulled into media narratives, anecdotes, individual portfolio workouts, or whatever controversy is dominating the week. Taken together, they often leave us with a distorted view of the overall market.

So once a quarter, I try to step back and look through the telescope: where is capital really flowing?

That means analysing every fundraising announcement I’ve tracked during the quarter. The dataset is not perfect, but it is good enough to reveal the bigger picture. If you think the conclusions are wrong, I’d be happy to be challenged.

Redemptions have dominated the conversation for the past six months

It feels like everyone has been so focused on redemptions that we forgot the other side of the equation, fundraising.

Private credit managers raised $262 billion in H1, 30% more than last year. That was not the outcome I expected given how poor Q1 was. The growth was entirely driven by Q2, when managers raised $173 billion, accounting for nearly 70% of H1 fundraising.

Stepping back, several recurring themes continue to stand out:

• Fewer funds are raising in the market.

• The largest managers are taking most of the capital.

• Credit secondaries set all time highs.

• Asia continues to outperform.

But there were also a few surprises:

• Fund sizes are getting larger.

• Direct lending is back.

• Europe is declining.

Let’s look at each of these in more detail.

Capital is concentrating at the top.

👉 This continues to be one of the most important takeaways

The average size of the top 5 funds has grown every year for the last 3 years.

• $10.6bn (2024)

• $11.0bn (2025)

• $14.3bn (2026).

Despite all the redemption noise, mega-managers are raising larger funds than ever before. More strikingly, there were three times as many funds above $10bn as there were last year.

At the other end of the market, smaller funds are struggling. The number of sub-$1bn fundraises fell 40% year-on-year, and the capital raised by those funds declined 30%.

This is best shown in the graph below. Capital concentration has reached the highest level I’ve recorded. In short, LPs are focusing on the largest managers.

To understand why capital is concentrating around the largest managers, it’s worth listening to Alan Waxman on Invest Like the Best and reading WTF Is Going On In Private Credit? Both help explain the rise of the factory model.

The Top 10 Funds Raised 60% of the Capital…

1. Barings’ $19 billion Global Direct Lending Strategy

2. Ares’ $12.7 billion Pathfinder Asset-Based Finance Strategy

3. Crescent Capital’s $10.8 billion Fourth U.S. Direct Lending Fund

4. Blackstone’s $10 billion Capital Opportunities Fund V

5. Ares’ $9.8 billion Special Opportunities Fund III

6. Antares Capital’s $8.5 billion Senior Loan Fund III

7. Guggenheim’s $8.4 billion Private Debt Fund IV

8. 17Capital’s $7.5 billion Credit Fund 2

9. Adams Street’s $7.5 billion Private Credit III

10. Apollo’s $6.5 billion Hybrid Value Fund III

The US took a record share of capital

North American funds raised 61% of the capital in H1 2026, up from 52% a year ago and reaching the highest market share I have ever recorded. The concentration was mainly driven by the mega-managers.

European fundraising, meanwhile, fell 35% YoY, a massive retreat for a region that has been a steady third of the market.

Asia continued to outperform, with 12 funds raising $7.5 billion in H1. This was a 5x increase in 2025. The clearest sign of this momentum is fund size: KKR, RRJ, and Varde each raised Asian vehicles of more than $1bn.

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📕Nick’s Top Articles for Q2

1. Diameter: WTF Is Going On In Private Credit?

2. The State of Private Credit in Q1 26

3. Sixth Street: The Rise of the Factory Model

4. Milken: Private Credit’s Dispersion Has Been Abnormally Compressed

5. Sona’s Honest Assessment of Private Credit

Institutional Investors are Coming Back to Direct Lending

This was the second biggest insight of the quarter: Direct lending is still very much alive. Five of the top 10 funds were direct lending vehicles. Yes, the number of direct lending fundraises fell 35% year-on-year, but the funds that did close were twice as large on average.

Opportunistic credit remains one of the clearest growth areas, with fundraising doubling year-on-year. While many strategies saw fewer funds close, the number of opportunistic fundraises rose for the third year running.

For more on this trend, see Dispersion Is Back

Credit secondaries volume has set new highs every year since 2020. Credit secondaries fundraising is up 6 x year-on-year, with Ares $7 billion raise leading the way.

For more on this trend, see Solving Private Credit’s DPI Problem.

🏆 Nick’s Funds of the Quarter

• Barings $19 billion Global Direct Lending Fund

It was only two years ago that Barings lost a meaningful portion of its team to Nomura. They’ve now managed to raise the largest fund I’ve recorded in 2026, despite this setback and despite being a direct lending fund.

• Stepstone’s $3.1 billion Structured Solutions Vehicle

Secondaries are going to reshape the private credit landscape over the next five years, and I expect Stepstone to play a key part in this.

• Crescent Cove $446 million Fund IV

While the “SaaS apocalypse” took most of the media attention, Crescent Cove showed that specialist managers can still raise capital in less obvious corners of the market.

Crescent Cove lends to high-growth technology businesses, including businesses operating in defense tech, autonomous driving, AI infrastructure, and cybersecurity.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Manager Updates

• Recommended Read: Cliffwater Corporate Lending Fund: The Machine Slows Down. [Read here] - Message me if you’re not a subscriber and I’ll gift you access.

• GIC is divesting $2 billion of private credit holdings. GIC has previously sold down its legacy fund interests, including exposure to managers such as Blackstone Inc. and Apollo Global Management, as part of its broader portfolio management activities. Evercore has reportedly been appointed to advise on the transaction. [Read here]

• Canyon Partners, a Dallas-based manager, launched Canyon ABF Partners. The joint venture is anchored by Daiichi Life Insurance and Korea Investment Holdings, which will provide a permanent balance sheet capital designed to facilitate $5+ billion of annual origination capacity. [Read here]

• Brookfield provides Papa John’s with $725 million of preferred equity. The deal has an all-in yield of 12%, with 10% PIK and 2% cash. The preferred equity also includes a minimum multiple on invested capital of 1.6x. [Read here]

Market Updates

• Much Ado About Nothing

  • You may have seen some noise about this Columbia study on private credit.

  • The paper’s key conclusions were:

    • Private-letter ratings systematically understate investment risk.

    • U.S Insurers would need to hold about $4.5 billion more capital if the ratings were aligned with the perceived impairment risk.

  • KBRA published its thoughts on the piece:

    • $4 billion is only 0.5% of the U.S. life insurance industry’s capital.

    • Non-investment grade only accounts for 10% of the total private letter rating portfolio. Why did the Columbia study apply the same extrapolations across the whole book?

• A reminder that private credit’s scale comes with strings attached. The Australian Securities and Investments Commission has officially put private credit managers on notice. Link

• Gemcorp’s Emerging Market Survey: Key Numbers at a Glance. (Link)

BDC’s Q2 Redemptions: Week 3

Oaktree’s Strategic Credit fund was the only addition this week, receiving redemptions of 4.5%. For context, this was nearly half of Q1’s redemption requests of 8.5%.

Oaktree met the full redemption.

Software and AI Updates

• GPU Rental Rates are Rising

• More than half of managers surveyed by LCD have reduced their exposure to software borrowers as a result of AI disruption risk.

• Software’s share of buyout activity continues to fall

KKR’s Divergence Conundrum

The Divergence Conundrum is an investing landscape where certain segments of the economy and markets are starved for capital, while others are flush with attractive financing options.

Where Is Relative Value Most Attractive Today in Credit?

• The biggest shift in credit this year has not been spreads.

• It has been dispersion driven by software-related credit concerns and redemption pressures in select areas of the private credit market.

• The market has become less willing to reward aggressive underwriting, elevated leverage, and concentrated risk.

There are higher levels of defaults and lower levels of recoveries.

• Defaults, including PIK and extensions, have been running around five percent since August 2024.

• The corporate direct lending market will consolidate the same way that the liquid credit markets did in prior decades

Private Credit is in a period of price discovery.

• Spreads continue to widen,

• Original issue discount levels have increased,

• Lenders are increasingly able to secure tighter structures and stronger covenants.

• This creates a better entry point for new capital deployment.

Signals are important.

• Structure, collateral, documentation, and sponsor behavior are increasingly becoming the real drivers of outcomes in credit.

• Reaching for incremental yield is not rewarded.

• Stay selective and focus on situations where expected returns are attractive relative to volatility, leverage, and potential loss.

There is growing gap between strong and weak credits.

• Asset-Based Finance remains attractive given its diversified collateral pools, contractual cash flows, and expanding opportunity set as assets continue to migrate away from bank balance sheets.

• Capital Solutions unlock value for businesses where customized financing structures providing meaningful risk mitigation and equity upside.

• This is particularly relevant where IPO and M&A activity remains uneven and sponsor exit timelines have been extended.

Private Credit is increasingly moving towards bifurcation.

The distinction will not just be between good and bad credits, but between well-constructed and poorly constructed portfolios

👉 Read KKR’s Full Report Here

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💰Fundraising News

Trimontium, a London-based manager, announced its launch with $1.5 billion in assets under management. The opportunistic strategy will invest across corporate capital (across debt, hybrid, and equity), special situations, structured and asset-backed credit, and uncorrelated asset classes, including IP rights and royalties. It can invest in both European and North American markets. More here

Altavair, a US aviation lessor, raised $1.4 billion from KKR. The investment will primarily come from KKR’s Infrastructure and Asset-Based Finance strategies. KKR has committed more than $8 billion with Altavair since 2018. Over that time, they have acquired 188 commercial aircraft and engine assets through a variety of transactions, including lessor trades, airline-direct new and used sale leasebacks, passenger-to-freight conversions, and structured transactions. More here

Blackstone Credit & Insurance launched SablePointe, a platform supporting origination, underwriting, and portfolio management in asset-based lending. SablePointe will support BXCI as it sources, structures, and manages senior secured asset-based and first-out credit facilities for corporate borrowers. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Top 3 Market Updates

1. US Direct lending volume fell to a three-year low. Pitchbook

   

2. Global Technology buyout deal value has also fallen sharply. Bain & Company

   

3. Despite this, deals priced between 450-499bps represent more than half of YTD activity. Blackrock

Manager Updates

• Ares raised $12.7 billion for its Pathfinder Fund III, the largest global asset-based finance fund in the market. Ares Alternative Credit now manages ~$57.3 billion, including $33.1 billion dedicated to non-investment grade assets. More here

Apollo and Blackstone announced a $35 bilion package to finance Broadcom’s new AI XPV Platform. The financing will enable over 20GW in compute capacity for leading frontier AI labs through 2028. The initial transaction will facilitate Anthropic’s previously announced capacity expansion of more than 1GW of compute infrastructure for training and inference starting in mid-2026. Link

Partnership Updates

• Janus Henderson is acquiring Rantum Capital, a Frankfurt‑based private markets investment manager. Founded in 2013, Rantum Capital focuses on providing private debt and private equity financing solutions to family and entrepreneur‑owned small and mid‑sized companies in Germany, Austria and Switzerland. The firm has raised around €1.2 billion of capital across its private credit and private equity strategies. Link

This acquisition builds on Janus Henderson’s recent expansion in private markets, they also acquired NBK Capital in the Middle East and Victory Park in the US in 2024.

BDC’s Q2 Redemptions: Week 2

4 BDC’s announced redemption requests last week: HLEND, TPG, BDEBT, and HPS Corporate Capital Solutions.

HPS’s $26 billion HLEND generated much of the attention, and as expected, capped its 13.3% of redemption requests at 5%.

Below is a summary of Q2 so far.

Credit Secondaries: Solving Private Credit’s DPI Problem

The 2019 Vintage Is Running Out of Road

• Ares believes that 2019 vintage private credit funds have an average DPI multiple of ~0.7x.

• These funds only have a few years to convert a meaningful share of NAV into distributions.

Credit secondaries are one of the fastest-growing segments of private markets.

• Beginning in the early 2020s, and accelerating meaningfully through 2022 and 2023. Apollo

Despite this growth, credit secondaries remain a fraction of the overall direct lending market.

• Carlyle estimates that only $20 billion of credit fund exposures traded in 2025.

• This impliying a fund turnover rate (Secondaries Market / Direct Lending Market) of ~1%.

• This is well below the 2–3% observed in private equity secondaries. Carlyle

This gap highlights the headroom for growth

• Apollo expects the private credit secondaries market to scale from $20 billion in 2025 to $50 billion within two to three years.

• Carlyle believes the credit secondaries market will grow to $80+ billion by 2030, comprised of ~$55 billion in GP- centered volume, which is experiencing the most significant growth, and ~$25 billion in LP-centered volume.

GP solutions are experiencing the most growth

• Unlike private equity continuation vehicles, where one or a small number of assets are typically selected, credit continuation vehicles are generally structured as full-fund solutions, with diversification as a core feature.

• Alignment is typically stronger than in LP interest transactions since the new vehicle is supported by GP carry rollover, additional GP capital commitments, and refreshed governance frameworks, such as enhanced reporting, Limited Partner Advisory Committee (“LPAC”) rights, tighter structural safeguards, and tailored downside mitigation features.

• For buyers, continuation vehicles offer the opportunity to deploy capital into seasoned portfolios with known performance characteristics. Buyers can benefit from full access to GP deal teams and detailed asset-level information, including underwriting memoranda, financial models, portfolio reviews, and valuation materials.

Pricing is one of the most easily misconstrued elements of the market

• Credit secondaries priced at 92% of NAV on average in H1 2025, up from 91% at the end of 2024.

• Strong pricing was fueled by significant fundraising dedicated to private credit and strong demand for senior direct lending interests. Jefferies

Beware of Discrete Discounts

Credit secondaries sources that have participated in or worked on the half-dozen mega-continuation vehicles in the market gave LCD generalized but realistic figures to illustrate how these processes usually work.

For example, a deal that prices nominally above par — for example, 102 — may get three points of discount from the portfolio’s NAV (which may be marked at 97) and another four points from the two quarters of post-reference date cash flows that have accrued to the buyers’ benefit. This brings the indirect discount to a total of seven points, and an effective price of 95, on a deal that may have a headline price of 102.

This is why no deals have traded at a “true premium” to par, a number of sources said. One banker estimated that the highest effective price seen in the market so far has been par, at most. Pitchbook

👉 Read More: Carlyle, Apollo, Coller Capital, Ares, Jefferies, Pitchbook

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💰Fundraising News

Ares raised $12.7 billion for its Pathfinder Fund III, the largest global asset-based finance fund in the market. Ares Alternative Credit now manages ~$57.3 billion, including $33.1 billion dedicated to non-investment grade assets. More here

The Pathfinder family of funds have pledged to donate at least 5-10% of the carried interest profits from to global health and education charitable organisations. Based on performance to date, the Pathfinder funds have already accrued approximately $56.9 million in pledged charitable contributions. Read more about Promote Giving here

Hunter Point Capital, a New York-based manager, closed its inaugural vintages of its NAV Lending and Preferred Solutions strategies, with total commitments of $4.3 billion. The GP Financing Solutions platform offers NAV-based loans and preferred financing solutions to investment managers. To date, it has completed 13 transactions. More here

Man Group, a UK-based manager, announced a first close of its Man Opportunistic Credit Fund III. The fund is targeting a final close of $1.25 billion. The strategy focuses primarily on mid-market, off-the-run and other less competitive opportunities, combining steady-return asset pools with direct-to-company financings and bespoke transactions. More here

KKR has had a first close of $1 billion for its Opportunistic Real Estate Credit Fund III. The fund will invest opportunistically in real estate in the US and Western Europe. The fund will focus on experienced sponsor and will also invest in mezzanine loans, preferred equity and single-asset, single-borrower deals. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• Mercer’s Guide to GP-Led Continuation Vehicle Terms:

  • Management fees typically range between 0.75-1.00%. This hasn’t changed over the past five years.

  • Nearly all vehicles used tiered carry structures with an average of nearly 3 tiers and a maximum carry of 20%,

  • GPs commit between 6% and 10%.

  • Watch out for the deferred payments…

  • Learn more here

• 17Capital: NAV loans uncovered. Link

• Ares: A Comprehensive Guide to Private Infrastructure. Link

• Ares: Public Market Valuations Overtake Private Markets. Link

Manager Updates

• Fasanara Capital launched its Ferrari Lending Platform. The platform is a partnership with Mattioli Automotive Group and will allow Fasanara to originate and manage loans secured by Ferrari cars. Link

Partnership Updates

• Blackstone signed a new private credit partnership with Nippon Life, one of Japan’s largest insurers. As part of the agreement, Nippon expects to allocate at least $9.4 billion to Blackstone’s private credit and structured credit strategies over the next five years. More here

Your chance to buy alleged MFS fraudster Paresh Raja’s Ferrari.

European Prestige UK Limited, a dealer in “luxurious, high-performance and limited-production vehicles”, is the lucky buyer of Raja’s 8 supercars. Readers interested in owning a piece of financial scandal history will doubtless be hitting refresh on the listings on their website. (Source FT:here)

BDC Redemption Season is Back

If you missed Season 1 of BDC redemptions, here’s a recap of what happened in Q1:

• Non-traded BDC redemption requests averaged ~10%.

• Most managers capped payouts at 5%.

• Blackstone and Oaktree decided to meet the full redemption requests.

BDCs Q2 Updates: Week 1

Last week saw the first wave of redemption announcements:

• Redemption requests have increased for all managers so far.

• Cliffwater’s redemption requests increased 20% QoQ.

• All managers have decided to cap at 5%.

Season 2 Spoilers

• Redemption requests will likely increase for all managers.

• Most managers will cap at 5%.

• Expect some fairly dramatic headlines.

So before your uncle forwards you an article asking if everything is okay, here are a few points worth keeping in mind.

The gates exist for a reason

• Before non-traded BDCs existed, investors could either have daily liquidity in a traded BDC or illiquidity in a 10-12 year private commingled fund.

• The innovation of non-traded BDCs was to allow investors to own illiquid assets while providing a structured path to liquidity, with the structure self-amortizing so investors could be made whole without forced asset liquidations.

• The 5%/20% limits weren’t pulled out of thin air but rather designed to track the weighted average life of the underlying loan portfolio.

• Meeting the contractual 5%/20% is exactly what these structures were designed to do.

• See Three Misunderstood Facts about BDCs.

We’ve Seen This Redemption Playbook Before

• It’s helpful to look back at history and understand how managers worked through similar instances when they were oversubscribed.

• Blackstone’s Real Estate Income Trust (BREIT) is one fund that faced a period of heightened redemption requests where investors asked to withdraw roughly 20% of shares at the peak (Exhibit 1). The fund ultimately fulfilled 100% of requests over a fourteen-month period.

• Assuming redemptions spike two to four times their quarterly limit in Q1 2026, iCapital estimates oversubscriptions could continue for a three to five quarter period.

See iCapital’s analysis.

Not all BDCs are equal

• Much of the media hype focuses on BDCs as a whole.

• However, as Neuberger highlighted,BDCs Have Shown Wide Performance Dispersion .

Lending money isn’t hard. Getting repaid can be hard. The managers who understood that during the very good times are the ones who will stand out now in this less certain environment.

TCW: Looking Beyond Cockroaches and Canaries

It’s the boulders NOT the pebbles.

• Focus has been on HNW investors.

• In reality, the redemptions are largely driven by a few larger family offices or single institutions (See Vista Credit).

• 90% of investors are choosing to remain invested.

Non-Traded BDCs ≠ All Private Credit

• Attention will be focused on the non-traded BDCs.

• As Apollo and others have pointed out, the market is much larger than this.

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Morgan Stanley: Private Credit Still an All-Weather Asset Class?

Morgan Stanley released a white paper on US and European Direct Lending. Below are a few graphs which might be helpful in your fundraising decks.

Europe Overtakes the US on Direct Lending Premiums

• Over the past three years, European direct lending has delivered an average premium of ~240 bps.

• Europe saw an increase in illiquidity premium from ~180 bps in 2023 to ~260 bps in 2025.

• In the US, the premium has compressed from ~270 bps in 2023 to ~180 bps in 2025.

Software Valuations have Normalised

• Software accounts for ~20-30% of Direct Lending

• Valuation multiples exceeded ~30x EV/EBITDA at their 2021 peak.

• They have since normalised significantly.

• Listed software companies continue to deliver revenue growth of approximately 10–15% with forward expectations of 10–11% p.a. for the next two years.

Direct lending benefited from a “golden age” of higher base rates

As policy rates have declined and spreads have compressed from peak levels, headline returns have moderated accordingly.

More recently, wider public credit spreads and the reset in public software valuations may have created an impression that private credit software assets may be susceptible to future markdowns. .

👉 Read the full report here

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💰Fundraising News

• Crescent Capital Group, a Los Angeles-based credit manager, raised $10.8 billion for its fourth U.S. direct lending fund, the largest fund in the firm’s history. The fund invests in sponsored lower middle market companies across the United States, targeting companies with EBITDA ranging from $5 million to $50 million. More here

• Eurazeo, a Paris-based asset manager, closed its $4.5 billion Private Debt VII fund. The firm’s flagship direct lending strategy focuses on financing lower mid-market companies across Europe and is already 65 percent deployed across more than 70 portfolio companies, totalling €2.5 billion in investments. More here

• HSBC Asset Management closed its $2 billion UK direct lending fund II. The strategy invests alongside HSBC’s bank in senior secured loans to lower- and core-middle-market businesses. It typically lends at 3-4x leverage with robust maintenance covenants and equity cushions of c.70%. More here

• PGIM, a Newark-based global asset manager and the investment arm of Prudential Financial, launched the PGIM Global Private Credit Fund SCA, a Luxembourg-domiciled fund targeting wealth investors in the United Kingdom, continental Europe and Asia. The fund invests in senior secured loans to middle market companies across North America, Europe and Australia, focusing on companies with EBITDA of $10 million to $75 million. More here

Didn’t make the cut

Software Deal Activity Was Elevated in the 2020-2022 Vintage. Link

https://www.connectmoney.com/stories/nav-reits-bdcs-have-returned-over-82b-to-investors-since-22/

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• Chicago Fed: Private equity-backed life insurers are fueling private credit.

  • While life insurers have long provided this form of private credit, private placements lending increased from $386 billion in 2014 to $849 billion in 2024.

  • In relative terms, private placements accounted for 14 percent of life insurers’ general account assets in 2024, up from 10 percent in 2014

  • Life Insurance PE-owned life insurers more than doubled their annuity market share from 8.5% to 18% and their indexed annuity market share from 16% to 33%.

  • 👉 Download the full report

• PGIM: Headlines vs. Health. Link

• Carlyle: Q2 Global Private Markets Quarterly. Link

• PWC: Private Credit Survey. Link

How much do you expect your allocation to private credit to change?

What IRR are you targeting on an unlevered basis?

👉 Read PWC’s Survey here

Data Centers and AI

• Apollo and Blackstone are structuring a $36 billion package financing AI for Anthropic, in one of the largest transactions of its kind:

  • The financing is designed to enable Anthropic to acquire Google’s tensor processing units (TPUs), which will then be leased back to the Anthropic for use across its expanding compute footprint.

  • Broadcom is expected to provide a form of residual value guarantee on the underlying hardware.

  • The financing will be divided into multiple tranches with Apollo and Blackstone syndicating portions of the debt to other institutional investors while retaining meaningful stakes themselves.

  • More here

• Blue Owl: Inside a Data Center. Link

• Brookfield: Opportunity in a constrained market. Link

• PIMCO: A-rated and higher hyperscalers have plenty of debt capacity. Link

  

BDC Updates

• BDCs with higher SaaS exposure have underperformed their peers. Link

Partnership Updates

• TD Bank, the 10th-largest commercial bank in the US by assets, is looking to partner with private credit managers. Link

• Investec, the UK-based bank, and Sequoia Investment Management Company, a global private credit manager dedicated to infrastructure, partnered to finance UK and European energy and infrastructure. Link

Restructuring

• Ares and MetLife disagree over the restructuring of Eagle Football debt. Link

• Blackstone and KKR to assume control of the dental group Affordable Care. Affordable Care was valued at $2.7bn when Harvest Partners acquired its stake in 2021. Link

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Partners Group: Separating Headlines from Reality

Private Credit Headlines Have Surged

While headlines warrant attention, they often overstate the near-term implications and underappreciate the underlying resilience in both current fundamentals and the macro backdrop.

Coverage Ratios Show Resilient Fundamentals

Interest coverage ratios have improved from mid-2024 lows, supported by lower policy rates and healthy EBITDA growth. Sub 1.0x borrowers have declined materially, falling to 14% in Q4 2025 from 21-23% throughout 2023 and early 2024.

Not All Software Is Equal

Incumbents with strong moats, proprietary data, AI-enabled workflows, and exposure to regulated or mission-critical end markets are better positioned to sustain value and drive efficiency gains. These are typically found in infrastructure and vertical application software.

By contrast, more vulnerable software tends to be rules-based, repetitive, and often tied to functions like customer service or project management. This exposure largely sits within horizontal application software, which accounts for around 35% of total software exposure within the U.S. direct lending market.

This real at-risk exposure is just 7%, well below the 20% headline figure.

Q1 Redemptions were five times above the prior four-quarter average

Redemption caps are a feature, not a flaw.

Most vehicles can meet redemptions at stated limits for at least the next 4-5 quarters, supported by multiple levers, including loan turnover of around 25-30% annually, liquidity sleeves of 10-15% in cash and liquid credit, and access to debt and bank credit lines.

The more important story is one of transition.

For much of the past decade, the dominant strategy was straightforward: build a diversified portfolio, apply leverage, and collect spread. That approach worked well in a benign default environment.

Partners Group thinks this will be harder to replicate going forward:

Private credit is now entering a new normal defined by greater bifurcation and wider dispersion of returns.

In a more differentiated market, selectivity becomes the primary driver of returns.

It is against this backdrop that we assess the current private credit fundamentals, separate headlines from reality, and offer a path forward for earning returns in private credit.

As an example:

Two thirds of managers have less than 10 years experience

With nearly half of direct lending managers formed post-COVID and close to 70% established within the past decade, many have yet to be tested through a full cycle – suggesting differentiation across managers is likely to increase further.

👉 Read the full report here

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💰Fundraising News

• Bridgepoint, the London-based manager, is closing its $5.8 billion European direct lending fund IV. The fund finances sponsored European middle-market businesses. The fund is nearly 50% larger than its predecessor fund, which closed at €3.4 billion. Link

• Pemberton, a London-based private credit manager, closed its $4 billion Strategic Capital IV fund. Launched in 2017, the opportunistic strategy invests in performing companies across Europe. More here

• Oaktree partnered with Pantheon to scale its European Direct Lending with a target to deploy up to $1.2 billion. Pantheon will provide additional capital alongside Oaktree’s existing portfolio of seeded investments, supporting a strategy focused on senior secured, first-lien loans to corporates across Europe and the UK. More here

• AHL Ventures, a Kenyan-based manager, announced a first close of $30.5 million for its debut institutional credit fund. The fund lends to African businesses, with a focus on financial inclusion, climate-related businesses, and agriculture. It can invest across the capital, providing senior secured, mezzanine and bridge loans. AHL continues to raise additional capital toward a targeted final close in Q1 2027. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

AI and Data Centers

• Pimco: AI Credit Expansion: Assessing the Micro and Macro Risks (**Recommended Read**).

  • 👉 Read The Full Report Here

• Blackstone is partnering with Google to create a new U.S.-based company that will offer efficient data center capacity, operations, networking, and a compute-as-a-service. Blackstone will initially commit $5 billion to ensure the first 500 MW of capacity goes online in 2027. More here

Market Updates

• Private credit spreads in the spotlight.

  • Spreads in the US have widened by 50-100 bps since the start of the year, placing typical deal pricing around 525 bps.

  • The European market has barely moved. The average European direct lending spread for the last 12 months is 509 bps, 13 bps lower the full-year 2025 reading.

  • 👉 Read Pitchbook’s Analysis Here

• Pitchbook’s Global Private Market Fundraising Report. Link

• Bank lending to UK businesses fell to the lowest level in nearly 30 years.

  • Total lending to private businesses returned to levels last seen in 1998

  • SME loans have almost halved as a % of GDP since 2011.

  • See the FT Article here and BCG Research here

• KKR: 2021 and 2022 Vintages Reflect Weaker Underwriting; Other Vintages Are Better Positioned. Link

Partnership Updates

Citi and HPS announced a €15 billion Private Capital Program. The Program will finance €15 billion of sub-investment grade debt opportunities in EMEA over the next five years. Citi will source businesses based in Continental Europe, the UK, and eventually the Middle East. More here

Manager Updates

• Abry Private Debt acquired a $330 million private credit portfolio with Coller Capital. The portfolio is primarily senior secured loans across a variety of industries, including commercial and professional services, healthcare, and consumer discretionary. All underlying investments are backed by established sponsors. Abry will assume an active management role, working directly with sponsors, lenders, and management teams throughout its hold period. More here

• Switzerland’s public sector pension fund Publica is preparing to allocate up to $1.1bn into private credit. The fund is looking for external managers for two separate direct lending mandates: one focused on Europe, worth up to €500 million, and another targeting the US market for up to $550 million. More here

• Federal prosecutors are reportedly examining valuation practices at BlackRock TCP Capital Corp (TCPC). TCPC disclosed an unusual off-cycle update in January, warning that it expected to reduce the value of its portfolio by about 19%. The announcement triggered a sharp share price drop and was followed by multiple class-action lawsuits from investors alleging misleading disclosures and improper valuation of loan assets. Link

Bank SRTs

• MUFG is exploring an SRT tied to $2 billion of credit exposure to private credit funds. The deal would shift potential losses on BDC credit lines to institutional investors, while MUFG keeps the underlying loans on its balance sheet. More here

• JPMorgan is reportedly exploring, and SRT tied $4 billion of NAV loans spanning across North America, Europe, and the Middle East. Investors are expected to receive low-teens returns in exchange for absorbing first-loss exposure. More here

Diameter: WTF Is Going On In Private Credit?

Diameter published a 59 page deck summarising the state of private credit and where it sees opportunities. I’d recommend you read the whole report, below are a few of my favourites

👉 Read the full deck

Fees on private credit vehicles have exceeded those of traded credit

Public alternatives managers leaned into AUM and FRE growth; Private Credit became their engine

Private Credit M&A expanded amid FRE multiple expansion

• HPS was acquired for ~30x forward FRE in July 2025

Industrial-scale origination and deployment drove PC platforms’ enterprise value

This has many overlaps with to Sixth Street’s recent “factory model” piece.

Where do Diameter opportunities?

👉 Read the full report here (Page 50+ for opportunities).

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💰Fundraising News

Direct Lending

• Barings raised $19 billion for its latest global direct lending vintage. The strategy focuses on upper-middle-market borrowers with roughly $15m–75m EBITDA across North America and Europe.

• Antares Capital, a Chicago-based alternative credit manager, raised $8.5 billion for its third Senior Loan Fund. The fund invests in senior secured loans across U.S. and Canadian borrowers. More here

• Stellus Capital Management, a Houston-based direct lender, closed its $1.5 billion Stellus Credit Fund IV. The fund provides senior secured loans to sponsored businesses in the United States and Canada. It has already invested in 44 portfolio companies. More here

Asia

• Värde Partners launched its $1 billion Asia-focused private debt fund. The fund will invest across India, Australia, and Southeast Asia. The vehicle marks Varde's first Asia fund exclusively focused on private credit. More here and here

• ASK Alternates, a Mumbai-based private credit manager backed by Blackstone, launched its second private credit fund with a ~$250 million target. The fund will invest in senior secured lending to high-quality Indian businesses. It will target a gross IRR of 14 to 16 percent, in line with the 15 percent gross IRR delivered by Fund I. More here

• Granite Asia, a Singapore-based multi-asset investment manager, is raising final-close capital via DBS Private Bank for its inaugural closed-ended private credit fund. The fund held its first close at $350 million in 2025, with anchor commitments led by Temasek and Khazanah Nasional, and is targeting a final close at $500 million. The strategy targets returns of 16 to 20 percent per annum, with investor cash yields of approximately 8 to 10 percent annually. More here

Investment Grade

• PGIM launched the PGIM Investment Grade Private Credit Fund, the first private credit collective investment trust designed for defined contribution retirement plans. The fund provides exposure to investment-grade private credit and is intended for use within target date funds, stable value funds, and other multimanager retirement structures. More here

Specialist

• Shamrock Capital, a Los Angeles-based manager specializing in media, entertainment, and communications, closed its $813 million Shamrock Capital Content Fund IV. Consistent with its predecessor funds, Content IV will focus on acquiring premium, cash flow-generating content and media rights across the evolving global entertainment landscape. The strategy’s current pipeline spans music, film, television, sports, video games, and creator economy opportunities. More here

Didn’t make this week’s cut

Dispersion Revisited

There’s been no let-up for CCC-rated loans, with spreads widening by over 300 bps so far this year.

In contrast, higher-rated credits have shown remarkable resilience: BB-rated loan spreads have marginally tightened this year, making for a yield of just over 6% – about a quarter of the level of CCCs. In short, the rating bands are a world apart, with the sort of aggressive bifurcation normally seen in a recession. So, what’s going on?

Market participants are expressing a clear view: the weakest credits cannot handle elevated interest rates and will struggle to refinance through mainstream channels. The fundamentals appear to validate this concern: leverage on CCC-rated loans has crept higher while other rating categories haven’t seen such increases.

Given the risk of default and the reality of poor recovery rates, buyers expect to be compensated in the form of an outsized spread. Meanwhile, higher-quality names continue to attract a broad buyer base, particularly from CLOs, thereby keeping spreads tight.

What if the universe of private credit is larger than you think?

Barings: What You Don’t Invest In Matters. Link

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

Every quarter, I summarise the 400+ pages of earnings transcripts from the largest managers. I do this for two main reasons:

1. It helps me understand the consensus views.

2. It brings to light unfiltered and occasionally provocative opinions.

This is the piece I look forward to writing every quarter. If you take away one useful insight, I’d really appreciate it if you could forward this newsletter on.

📚 Quotes of the Quarter

• Provocative Opinions

  • The Obsession with Levered Lending is a Failure of Imagination

  • Don’t Trust the Headlines, Focus on Fundamentals

  • The Illusion of Liquidity in Fixed Income

  • BDC Redemptions

  • Blackstone Says BDC Investors Knew What They Were Buying

  • Blue Owl Says Its Problem Loans Have Recovered 1.1x to 1.2x

  • Ares Says It Has the Most Credit Dry Powder

  • Why Blackstone Likes Being Capital-Light

  • Institutional Investors are Coming Back to Direct Lending

  • Blackstone Is the World’s Largest Investor in AI Infrastructure

  • Private Credit Has Contracted Once. Banks Have Contracted Eight Times.

• Consensus Views

  • Spreads, Pricing & Market Conditions

  • Deployment & Origination

  • Manager Strategy & Platform Growth

  • Market Risks, Bubble Debate & Big Narrative

  • Wealth, Retail & 401(k)s

  • Partnerships & Strategic Alliances

  • Returns & Performance

  • Portfolio Quality, Defaults & Non-Accruals

  • Fundraising & Capital Formation

  • Investment Grade Private Credit & Insurance Demand

  • Infrastructure & Data Centers

  • PIK

  • Saaspocalypse

  • Blue Owl’s 10x Gain on Space X

  • Secondaries

Transcripts can be found here

Provocative Opinions

The Obsession with Levered Lending is a Failure of Imagination

If there was one quote that best captured how large managers feel about recent press coverage, it came from Marc Rowan.

Apollo

The press remains fixated on a $2 trillion slice of this market, which should be called levered lending. Most of the financial press treats this as if it is the entire story of what’s happening in private markets and it is far from it. The investment grade private credit market, which is being driven by the global industrial renaissance, is a $38 trillion market. Therefore, the total opportunity in private credit is some $40 trillion.

The obsession with this very narrow corner of the market, this $2 trillion slice levered lending, is frankly, a failure of imagination. Credit, in any economy, only comes from one of two places. It comes from the banking system or the investment marketplace. There is no third choice.

Does that mean that risk has been transferred to investors? I don’t think so. What has happened in our marketplace and the growth of levered lending, particularly exposure to BDCs, is a rational move by investors who are looking to de-risk. Most of the investors in levered lending have come from the sale of their equity portfolio. Investors rationally have decided that they can earn equity-like returns from first lien risk, rather than by holding equity for a portion of their more speculative exposures.

Private credit is just credit. You underwrite it well and it performs. You underwrite it poorly and it doesn’t.

↩ Return to index

Don’t Trust the Headlines, Focus on Fundamentals

Managers are united in Marc’s frustration.

KKR

So our suggestion is don’t trust the headlines. Stay focused on the fundamentals and how we are executing. That’s what ultimately matters and how we are spending our time. This approach has served us well for the last 50 years, and we expect will continue to for the next 50.

BlackRock

There has been a lot of attention on private credit, but the headlines do not reflect what clients are telling us, what our portfolio data shows, or where we see the market going. Demand is structural. Private credit serves an important role in the financing ecosystem. Banks, governments, and public capital markets cannot fully address the world’s growth and investment capital needs. That is not changing.

Apollo

Almost all the spread widening we saw take place, took place in the media and did not take place in the market with the exception of below investment grade software and in IG software to some extent, where we did see spread widening, where we just do not have nor do we want meaningful exposure given the diverse set of outcomes that can happen with respect to credit.

BlackRock

Much of the focus has been on wealth vehicles like BDCs, interval funds, and tender funds. These funds make up around $550 billion in AUM — or about 25% — of the $2.2 trillion private credit industry. Institutional demand is actually accelerating.

↩ Return to index

The Illusion of Liquidity in Fixed Income

Apollo

Fixed income trading capital in the world is now 10% of what it was in 2008, and the market is three times its size. The entirety of the market, whether you are investment grade or below investment grade, is just not that liquid. It just appears liquid on good days. We have already seen wholesale breakdowns in the liquidity of this marketplace during COVID and during UK LDI, and I expect that we will see this again.

↩ Return to index

BDC Redemptions

The common message was that redemptions are manageable, concentrated, and much smaller than the headlines imply.

Ares Management

If these two funds were to experience 5% quarterly redemptions for a full year, with no gross inflows...It could impact our FPAUM by approximately 1% annually.

Ares Management

The majority of repurchase requests during the most recent quarter came from a limited number of family offices... Over 95% of our investors did not request redemptions.

Blackstone

Contrary to this popular idea that it is small investors leading the charge, it is actually a smaller number of large investors who are double the size, on average, of the typical account in these vehicles. They are the ones — we saw this if you went back to BREIT, and it is the same story here with BCRED. The great mass, by number, of smaller investors tends to stick with the product over a long period of time. It is the bigger boulders, as opposed to the pebbles, where you get more movement in terms of redemptions.

Blue Owl Capital

While the level of debate around private credit has resulted in elevated industry-wide redemption requests, the actual impact to Blue Owl Capital Inc.’s revenues and earnings for the first quarter was quite modest. During the quarter, net outflows of roughly $170 million from OCIC and OTIC were less than six basis points of our beginning-of-period AUM.

BlackRock

Much of the focus has been on wealth vehicles like BDCs, interval funds, and tender funds. These funds make up around $550 billion in AUM — or about 25% — of the $2.2 trillion private credit industry. Institutional demand is actually accelerating.

Blue Owl Capital

For OCIC, redemption requests were concentrated, with 1% of investors representing a majority of tenders, and approximately 90% of the investor base elected not to tender at all. Generally, requests have been more investor-led than adviser-led, highlighting continued strong support from our partners in what we believe has been a headline-driven, not fundamental-driven, redemption environment.

KKR

In total, direct lending is $39 billion or 5% of our AUM. It’s an important business for us, but in the framework of KKR, it’s of modest size. And with a lot of focus on redemption activity in the wealth space, we note the size of our private BDC is even smaller, around $3 billion of AUM or 0.4% of our AUM in total. In terms of our public BDC, FSK is a little less than 2% of our AUM.

↩ Return to index

Blackstone Says BDC Investors Knew What They Were Buying

Blackstone

What has been more challenging is that some of the social media and press reporting is so different than the facts that we see. When you think about these products, they are sold not directly to individual investors; they are sold through financial advisers who are obviously sophisticated. There is incredible levels of disclosure when we are selling these products. If you look at BCRED, on the cover page, there are six bold highlighted lines talking about the liquidity limitations in the product.

To me, it is not a surprise that we have more than 300,000 customers, and yet, we have not heard complaints from them that they do not understand that they are trading away some liquidity for higher returns.

↩ Return to index

Blue Owl Says Its Problem Loans Have Recovered 1.1x to 1.2x

Blue Owl Capital

We have gone back and studied all of the cases where we have had restructurings or material amendments driven by performance issues. The actual statistics are: our average principal recovery in those cases has been $0.80 on the dollar. When you incorporate that we actually had several coupons in on average in those instances as well, our actual recoveries in total on our problem situations have been 1.1x to 1.2x.

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Ares Says It Has the Most Credit Dry Powder

Ares Management

As one of the largest institutionally backed private credit providers globally, we believe that we have the most credit dry powder of any public player in the market, totaling more than $100 billion.

↩ Return to index

Why Blackstone Likes Being Capital-Light

Blackstone

Running capital light can be a harder business model — you have to raise money from third parties as opposed to borrowing large amounts of money and earning a spread on that. But we do believe that, given what can happen when the environment changes and what the regulatory climate can look like, being an investment manager gives us the greatest flexibility. Operating a business with virtually no net debt and no insurance liabilities means that if we need to use capital to do something at the firm level, it is available. There is no moment where we are facing any sort of liquidity crisis.

We pay out basically 100% of our earnings between our dividends and our stock purchases. We like this capital-light model. We like being an open-architecture third-party manager for our investors. We think that is the right long-term approach. And particularly when you get to moments of volatility, you are not going to see redemption risk at a firm level. There is no credit risk at a firm level. We think this is an all-weather business model. It is why we have been through a lot of volatility, particularly in the last six years, and Blackstone Inc. keeps powering ahead.

↩ Return to index

Institutional Investors are Coming Back to Direct Lending

KKR

The shift we’re seeing in the last several weeks has been the institution is kind of coming back to direct lending a bit and saying, okay, I see all these headlines about wealth, that should mean that risk/reward is getting better on new deals. And therefore, I’m going to take a fresh look at it again.

↩ Return to index

Blackstone Is the World’s Largest Investor in AI Infrastructure

Blackstone

Today, we believe Blackstone has become the largest investor in AI-related infrastructure in the world... Our total portfolio now consists of over $150 billion of data centers globally, including facilities under construction, and it continues to grow rapidly, with an additional $160 billion in prospective pipeline development.

↩ Return to index

Private Credit Has Contracted Once. Banks Have Contracted Eight Times.

Ares Management

If you look over the last 25 years, U.S. private credit has contracted once, which was over ten years ago, versus the banking sector, which has contracted eight times over the same period.

↩ Return to index

Consensus Views

Spreads, Pricing & Market Conditions

Ares Management

The current environment is offering wider spreads, higher fees and better terms. With over $150 billion of available capital and a highly diversified platform, we are well positioned to take advantage of these conditions and deploy capital at more attractive risk-adjusted returns.

Oaktree Specialty Lending (OCSL)

We are encouraged that spreads on new private credit investments have widened to SOFR plus 500 to 550 basis points, approximately 50 to 100 basis points above the 2025 tights, and supports improved forward returns. We are also seeing modest improvements in documentation and more lender-friendly structures.

BlackRock

Private credit has historically offered asset-level yields approximately 150 basis points higher than comparable weighted traditional fixed income. New activity levels have been somewhat lower in the first quarter, which is seasonal and reflects market uncertainty. But new, regular-way direct lending is being quoted 25 to 50 basis points wider than where the market was in the fourth quarter, with select opportunities over 100 basis points wider.

ARCC

Spreads on first lien originations in the Q1 increased by approximately 20 basis points quarter-over-quarter, while leverage levels declined by nearly half a turn of EBITDA.

Blue Owl Capital

As Marc mentioned earlier, the market conditions that create volatility in public markets also tend to result in spread widening and a decline in available capital across asset classes. We are beginning to see this in the origination pipeline, with spreads at least 50 basis points wider.

↩ Return to index

Deployment & Origination

Ares Management

The transaction market environment for U.S. direct lending was slower in the first quarter as industry-wide deal count and middle market M&A declined by 41% in Q1 2026 versus Q1 2025 due to impacts from the Iran war, and changing inflation and rate expectations.

↩ Return to index

Manager Strategy & Platform Growth

Ares Management

I would remind everyone that Ares experienced its two fastest periods of growth during the GFC and COVID.

Blackstone

Operating a business with virtually no net debt and no insurance liabilities means that if we need to use capital to do something at the firm level, it is available. There is no moment where we are facing any sort of liquidity crisis.

Blue Owl Capital

Direct lending represents only 37% of Blue Owl Capital Inc.’s AUM. To put this in context, real assets is now 27% of AUM, and GP strategic capital is 22%. Nearly three-quarters of equity capital we have raised over the last twelve months has been outside of direct lending.

Ares

We are not changing the playbook. Our model has been the same for decades: originate a broad funnel and apply rigorous diligence and portfolio management to drive returns. Two underappreciated hallmarks: first, selectivity — we typically have a yes rate of about 5% across private credit. Second, incumbency — roughly half of direct lending deployment comes from incumbent portfolio relationships, which makes for easier, higher-conviction underwriting. Those two together have supported our loss rates, which across private credit have been trending close to zero.

Blackstone

In the back half of last year we took two companies public in the U.S., Allegion and Medline. Those stocks are up 160%. So if you bring good companies that have real earnings momentum, the market wants that. So I would say it breaks into different buckets. It is AI beneficiary companies — obviously digital infrastructure, some of the tech companies that are going to go public this year.

↩ Return to index

Market Risks, Bubble Debate & Big Narrative

Blackstone

BDCs and credit interval funds with redemption features represent less than 10% of the U.S. non-investment-grade credit markets. Meanwhile, the Treasury Secretary, leaders of the Federal Reserve and the SEC, and the heads of numerous financial institutions have now acknowledged they do not see systemic risk from private credit.

Ares Management

While private credit has expanded at low double-digit rates over the past decade, this growth tracks in line with the growth of the $5 trillion private equity sector and other private market asset classes. Also, the percentage of our economy’s GDP funded by corporate credit — including private credit, bank C&I loans, syndicated bank loans and high yield bonds — has not changed over the past decade. This indicates that the growth of private credit is not increasing the amount of leveraged credit in the economy, and is providing more consistent funding throughout business cycles.

Brookfield

We have no software exposure and our credit portfolio is performing incredibly well.

BlackRock

Over the last five to seven years, relatively benign credit markets have lifted all boats. As the overall market environment becomes more complex, we expect to see much more dispersion in performance among private credit managers. That is an environment we like to compete in.

↩ Return to index

Wealth, Retail & 401(k)s

BlackRock

I have been doing this for 20+ years. We have seen more advancements on private markets in 401(k)s in the last 12 months than in the prior 20 years.

↩ Return to index

Partnerships & Strategic Alliances

KKR

We are seeing more and more clients wanting to do more with fewer partners is absolutely playing out, especially as they see more dispersion of results. We’re heading towards more of a K-shaped industry.

↩ Return to index

Returns & Performance

Ares Management

Over the last twelve months, we generated time-weighted returns of approximately 12% to 15% in our U.S. direct lending strategies, 15% in Alternative Credit, 12% in Opportunistic Credit, 9% in European direct lending and over 20% in APAC credit.

Blackstone

At Blackstone Inc., we have generated 9.4% net returns annually in our non-investment-grade private credit strategies since inception nearly twenty years ago — roughly double the return of the leveraged loan market.

BlackRock

HLEND is one of the best-performing non-traded BDCs in the market. It has logged a 10.4% annualized total return since inception. It is one of the only funds among major peers with positive performance in 2026.

Blue Owl Capital

Our direct lending strategy generated gross returns of 8.5% over the last twelve months and, more specifically, our largest nontraded BDC, OCIC, has delivered an attractive 9.1% annualized return over approximately five years since inception.

Blue Owl Capital

In alternative credit, gross returns of 11% over the last twelve months have compared favorably to leveraged loans as well, outperforming by more than 600 basis points.

Apollo

If you look at the 21-year-plus track record there, the return coming out of ARCC has beaten the S&P 500, the syndicated bank loan market, the high-yield bond market, and probably most anything else that people have invested in. It’s a wonderful company and a wonderful structure.

↩ Return to index

Portfolio Quality, Defaults & Non-Accruals

Ares Management

Across our direct lending portfolios, we are seeing continued near 10% EBITDA growth, loan-to-value ratios in the mid-40% range, private equity funds continue to fund new transactions with a majority in equity, and improving interest coverage ratios of 2.2x.

Ares Management

Non-accrual ratios are well below historical norms, and we are generally financing much larger, more resilient businesses today versus past vintages. The relatively small number of credit issues we see are company-specific rather than indicative of broader trends.

Blackstone

BCRED’s borrowers reported low double-digit EBITDA growth for the most recent twelve-month period, while interest coverage has improved by approximately 40% over the past two years to 2.2x as rates have declined and earnings have grown.

Carlyle

In direct lending, our current nonaccrual rate is only 1%, and our inception-to-date loss rate over 13 years is just 8 basis points per annum.

Blue Owl Capital

Our average annual loss rate remains a very low 12 basis points, an important factor in driving our continued outperformance to leveraged loan and high-yield indices.

Blue Owl Capital

LTVs have picked up modestly, incorporating moves in public comps and broad-based spread widening. As a result, LTVs are, on average, in the low forties across our platform and in the tech lending portfolio, continuing to illustrate meaningful equity cushion below our senior secured positions even in the face of compressed equity market multiples.

↩ Return to index

Fundraising & Capital Formation

KKR

A real bright spot for us this quarter was in credit where we raised $15 billion across our platform. That momentum was driven by our asset-based finance business, which represents over $90 billion of AUM today.

Ares Management

We are on track for another record year of fundraising as we raised $30 billion of gross capital in Q1, which is our highest ever first quarter and is up 46% compared to last year’s record first quarter.

Blackstone

Inflows reached $69 billion in the first quarter and nearly $250 billion over the last twelve months, reflecting broad-based strength across our fundraising channels. Total assets under management grew 12% year over year to a new record level of more than $1.3 trillion.

Brookfield

We have raised $67 billion of capital so far this year including $21 billion during the quarter.

BlackRock

Clients awarded us with $130 billion of net inflows in the first quarter. That drove 8% organic base fee growth, representing our highest first quarter in the last five years.

Blue Owl Capital

We raised $57 billion of capital over the last twelve months, our second highest capital raise since inception, and $11 billion in the first quarter, which represents approximately 14% annualized on our AUM at the end of 2025.

Carlyle

On inflows, we had a great start to the year, attracting $13 billion of new capital.

KKR

We raised $28 billion of new capital in the quarter with demand really widespread across asset classes and geographies. A real bright spot for us this quarter was in credit where we raised $15 billion across our platform. That momentum was driven by our asset-based finance business, which represents over $90 billion of AUM today.

↩ Return to index

Investment Grade Private Credit & Insurance Demand

Blackstone

In Q1, our investment-grade private credit platform grew 23% year over year to approximately $130 billion.

Blackstone

Our model generated nearly 180 basis points of excess spread on credits we placed or originated over the last twelve months for our private investment-grade-focused limited partners.

Blackstone

In the insurance channel overall, our open-architecture, multi-client approach continues to resonate, with AUM growing 18% year over year to $280 billion — up fourfold in the past five years.

Brookfield

In April, we closed the acquisition of Just Group, a leading pension risk transfer platform in the U.K. This increased total insurance assets by $40 billion and we are now heading to $200 billion and strengthens our position in one of the world’s most attractive retirement markets.

↩ Return to index

Infrastructure & Data Centers

Blue Owl Capital

In fact, just a couple of months ago, Amazon announced a $12 billion data center campus with investment from Blue Owl Capital Inc.’s digital infrastructure funds... This marks the fourth data center project above $10 billion announced in less than eighteen months.

KKR

Digital infrastructure remains a massive theme for us. We’ve deployed over $40 billion of capital KKR plus our partners across a variety of digital infrastructure themes have over a 20% gross IRR return to date in terms of that activity for us.

Blackstone

Today, we believe Blackstone has become the largest investor in AI-related infrastructure in the world... Our total portfolio now consists of over $150 billion of data centers globally, including facilities under construction, and it continues to grow rapidly, with an additional $160 billion in prospective pipeline development.

↩ Return to index

PIK

Oaktree Specialty Lending (OCSL)

OCSL continues to be prudent around the use of payment-in-kind income, with PIK representing approximately 5.5% of adjusted total investment income during the quarter. This is down from 6.3% last quarter due to the sale of athenahealth PIK preferred at our mark.

↩ Return to index

Saaspocalypse

Blackstone

If you look at our software exposure in BCRED, for instance, the average borrower put up $3 billion of equity. So they have a lot of incentives here to make these investments work.

Oaktree Specialty Lending (OCSL)

Within our performing debt portfolio, 2 investments representing 2.9% of fair value are classified as having high AI risk.

Ares Management

The study graded each company on a spectrum of risk characteristics and concluded that our software-oriented portfolio is very well positioned, with 86% of the portfolio with low risk of potential AI disruption. Approximately 13% of the portfolio was classified as medium risk... and only 1% of the portfolio was categorized as having high risk of AI disruption.

Ares

New software deals are getting done where competitive moats are evident, and spreads reflect market anxiety. We are also using this market to exit select names where conviction is lower, which contributed to the gross-to-net outcome this quarter. More broadly, think about core systems — finance, cybersecurity, order management — firms are not ripping them out; they are layering AI to enhance them, and vendors are doing the same.

Ares Management

We are not seeing any credit deterioration broadly within software, as we have only one software company on non-accrual.

KKR

So just look to level set, software represents around 7% of our AUM. In private equity, it’s a higher percentage. It’s around 15% across our credit platform in total, it’s 5%. And in Global Atlantic, that number is about 2.5% of our AUM.

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Blue Owl’s 10x Gain on SpaceX

Blue Owl Capital

Specifically at SpaceX, just as an example, we made about 10x our money on that investment. We have sold about half of it at a $1.25 trillion valuation, still holding about half of it.

↩ Return to index

Secondaries

Oaktree Specialty Lending

Secondary private transactions, whether through partial or full portfolio sales, will reshape the private credit landscape as certain market participants look to optimize their asset portfolio or satisfy liquidity demands.

↩ Return to index

Thanks again for reading. Let me know if you find these posts useful or how I can improve it for next quarter.

Share this with your Investor Relations Colleagues.

This newsletter is for education or entertainment purposes only. It should not be taken as investment advice.

The Milken conference brings together the world’s best minds to tackle some of the most urgent challenges. This year’s speakers included David Beckham, John Legend and Peyton Manning. Civilisation is in safe hands.

Alongside the minor matters of global health, education and democracy, Milken also found time for the question troubling every private markets investor:

“How do I get my money back?

Joking aside, there is a surprising amount of great content from Milken this year. I’ve pulled together a summary of my top quotes below with timestamps included for anyone who would rather not spend several hours watching private markets panels.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• Apollo: Europe is undergoing a structural shift in how companies access capital. Link

• Blackrock: Putting Private Credit Concerns in Perspective

• Powell: We don’t see any risk of contagion. Link

• FSB: Vulnerabilities in Private Credit. Link

• ILPA’s Guidance on Continuation Funds. Link (or if you’re the FT “Conflict Vehicles”)

• • 👉 Read Pitchbook’s report

Manager Updates

• Blue Owl made more than 10x on its SpaceX Investment. Link

• Apollo launches its Multi-Asset Prime Securities,

  • A structured credit product enabling access to more diversified and higher-credit-quality assets that are risk-managed every day.

  • In comparison to US BSL CLOs, the vehicle has a thicker equity tranche and is approximately 85% investment-grade rated by leading agencies, with underlying collateral that is more diverse and significantly higher rated. It was structured with investors in mind.

  • 👉 More here

BDC / Interval Fund Updates

• LibreMax Capital, a New York-based asset-backed manager, launched its first interval fund with $885 million of commitments. The fund invests in credit backed by consumer, housing, and commercial receivables.

Public BDCs are less crowded than the headlines suggest.

👉 Read the FT’s article here

Subscribe now

Milken Conference 2026

Below are my highlights from the Milken Conference last week. The link below the quote takes you directly to the video.

You’ll need to register for a free account but the amount of content is worth it.

Private credit dispersion has been abnormally compressed, not abnormally wide

“When you look back the last 10 years, the difference between a top quartile manager and a bottom quartile manager in private credit has only been about 250 basis points. So there’s been no dispersion. When you look at a typical or most other typical asset classes in credit, that’s normally about 500 basis points.”

Lee Kruter (GoldenTree Asset Management), Credit Outlook panel (04:05)

The retail money story is the real risk

“Most asset managers want to see a lot of this retirement money come into the market because it increases AUMs, it increases fees, it’s good for public company growth. I’m concerned about it... when all that money comes in, private credit, which should be an alpha product, becomes a beta product. It becomes no different than syndicated loan and fixed-income dollars... institutional investors all over the world are concerned about this. Not private credit, not about defaults, not about underwriting. They’re concerned about retail money coming into the funds that they invest with, and they do not want to see retail money invested side by side with them in institutional capital accounts because they’re concerned about deterioration.”

Ted Koenig (Monroe Capital), Private Credit Institutional Portfolio panel (29:30)

The 2022 vintage software loans never delevered

“If you look at a subset of broadly syndicated loans and software that were around in the end of 2022 and still around now, well, guess what’s happened? They never de-levered. The leverage is roughly the same as it was back then because the growth didn’t materialize in the way that they were hoping to, and if you bought them with a 40% LTV then, and equity valuations have come down, well, now you’re looking at least at 70 to 75% LTV on average.”

Brad Rogoff (Barclays), Banks Private Credit and the Future of Risk panel (42:00)

1,000 PE deals are stuck and many of them no one wants

“There were 1,000 transactions done in the PE community between 2015 and 2022 of $500 million or greater. Very few have exited. Some will find strategics, not that many. They’re all going to have to get sold. And a lot of them, nobody wants. Because the other filter for exits today, who is the buyer? Fidelity, a corporate, a CV. They only want the best.”

Jonathan Sokoloff (Leonard Green), Navigating Liquidity Challenges in Private Equity panel (09:20_

Asset-based finance is harder than direct lending, and the tourists do not realise that

“I think it’s a lot harder than private credit in the direct lending side. You need a lot of experience working with these non-bank originators, knowing how to look at the data, making sure you’re verifying your collateral... I think there’s a false sense of security sometimes that people can have when they see diversification and asset coverage on these deals... As people start to get attracted to this space, I think you’re going to see some tourists come in that probably don’t have that level of expertise.”

Jack (Fortress), ABF/ABL/Specialty Finance panel (24:08)

The scale gap, OpenAI round versus German growth funding

“The largest funding round agreed on for an OpenAI is $122 billion, right? The total collective growth funding in Germany last year was €8.4 billion.”

Hendrik Brandis (Earlybird Venture Capital), The European Opportunity panel (40:15)

Neuberger: Why the BDC Sell-Off Tells an Incomplete Story

Neuberger published a great piece on BDCs. Below are my highlights.

👉 Read the full report here

While BDC Assets Have Grown, They Remain a Small Part of the Private Credit Universe

Some investors may be missing the nuance of the private credit market, especially as the entire BDC universe, listed and non-traded combined, amounts to only about $500 billion.

Non-Traded BDCs: Redemptions Don’t Appear to Reflect Performance

Many of the larger BDC vehicles produced high single-digit returns last year, which compares favorably to a range of fixed income alternatives. Redemptions reflect other factors, including investor liquidity needs and a broader reassessment of portfolio positioning, rather than dissatisfaction with how the underlying assets have performed.

Listed BDCs Have Shown Wide Performance Dispersion Overall

👉 Read the full report here

💰Fundraising News

• Apollo closed its $6.5 billion Hybrid Value Fund III. The fund sits between traditional debt and equity, investing mainly in structured equity, preferred securities, and convertibles, and providing capital solutions for growth, acquisitions, shareholder liquidity, and balance sheet optimisation. Link

• Infranity, a Paris-based infrastructure investor, raised $2.7 billion for its Enhanced Return Debt Fund. Fifty percent of the fund’s capital will be directed towards climate solutions, with a focus on renewable energy and low carbon energy transition projects, as well as essential digital and social infrastructure. ERDF provides senior secured sub-investment-grade loans. The Article 8 fund targets an 8.5-9 percent gross IRR. More here

• S3 Capital, a New York-based private construction lender, closed its $1.3 billion Credit Fund III. The fund targets first-lien construction lending, primarily financing multifamily residential developments in supply-constrained US markets, and is expected to support approximately $4.3 billion of loan originations. More here

• Flexpoint Ford, a Chicago-based financial services investor, raised $1.1 billion for its Asset Opportunity Fund III and Insurance Opportunity Fund I. More here

• Audax Private Debt, a New York-based manager, closed its $1 billion private credit continuation vehicle led and structured by Pantheon. The vehicle relates to Audax’s 2018-vintage direct lending fund. More here

• LibreMax Capital, a New York-based asset-backed manager, launched its first interval fund with $885 million of commitments. The fund invests in private asset-backed finance and traded structured credit backed by consumer, housing and commercial receivables, and offers daily subscriptions with quarterly liquidity through repurchases.

• Corbin Capital Partners, a New York-based alternative asset manager, closed its first dedicated litigation finance fund with $342 million of commitments. The fund will finance commercial litigation, including business disputes, antitrust, mass torts, bankruptcy-related litigation, and intellectual property claims. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.

If you’re reading this on Outlook, most of the graphs won’t show. I’d recommend you read it online

📕 Reads of the Week

Market Updates

• KBRA: Q1 2026 Middle Market Report *** (Subject Piece) ***

  • Upper middle market defaults are doubling every quarter.

  • A record count of companies received a downgrade of two or more levels.

  • The decline in sales growth in the Financial Services sector was the highest among all sectors.

  • Roll-up strategies continue to experience stress, amplified by elevated leverage.

  • 👉 Read the full report here

• Peek under the Hood: An Analysis of Private Credit Loans in Top Public BDCs.

  • The all-in yield on first-lien debt, Sofr-referenced loans across ten BDCs, was 9.2% in Q4 2025, down 100 basis YoY.

  • 👉 Read Pitchbook’s report

    

• KKRs Wealth - Private Market Survey

  • 1,000 individual investors with $500K+ in investable assets, To get a clearer view into how individual investors are thinking about private markets,

  • Fewer than 1 out of 10 investors correctly identified that, 93% of U.S. companies with $50M+ in revenue are privately held.

  • 👉 Read KKR’s Wealth Survey

• Cliffwater: Ten Misconceptions About Private Credit. Link

Manager Updates

• Howard Marks calms down Andrew Ross Sorkin. Link

• BlackRock on Healthcare Growth Debt and Venture Debt.

• Lazard buys Campbell Lutyens for $575m. Link

• Brown University sells half its position in Blue Owl Capital Inc. Link

BDC / Interval Fund Updates

• Saba Announces New BDC Strategy to Address Retail Investor Liquidity Needs

  • The strategy targets entry points at discounts of 30-40% or greater to NAV,

  • Saba believes the question is not whether this space will experience significant stress, but when.

  • Read more

• Invesco: Navigating BDCs’ Growing Pains. Link

Timeline of Spread Differential of BDCs vs US IG

Source: Invesco

Partnership Updates

• ICEA LION, an East African provider of insurance and pensions, is looking to invest in pan-African private credit funds. It has a preference for managers that have strong relationships with DFIs, and are ideally on at least their second or third fund. Link

Subscribe now

Goldman Sachs on Private Credit

Goldman Sachs’ latest newsletter asks a lot of loaded questions. Hidden amongst the filler are a few genuinely interesting points. Below are my highlights.

👉 Read The Full Report Here

Redemptions Gates shouldn’t be surprised. But “should” is one of the most interesting words in the English language.

Howard Marks: “It’s absolutely true that investors participating in a fund that limits redemptions shouldn’t be surprised when full liquidity isn’t available. But “should” is one of the most interesting words in the English language. If people shouldn’t expect liquidity, why are they disappointed when they don't have it? The answer is either that they weren’t adequately informed, or they were well informed but didn’t understand or take cognizance of the terms. The risk of either of these is highest for retail investors, raising the question of whether these vehicles are suitable for the retail base.”

Software Loans won’t Jeopardize the financial system

Howard Marks: If the first-lien lender lost half their money in such a case, that wouldn’t be too bad in a diversified portfolio. If a quarter of the investments are in software and they all incur such losses, then the lender would lose half their money in a quarter of their investments, or 12.5% of the portfolio. And even if they’re levered 1:1, that would amount to a 25% loss, which still isn’t existential. There's an old saying that in times of crisis, all correlations go to one. In other words, everybody panics and sees all outcomes as equally probable and equally bad. But losing a quarter of your capital because the software industry loses most of its value isn’t abysmal. It's just bad for the fund’s investors. And it doesn't jeopardize the financial system

Loan valuations tend to adjust with a lag going into credit distress

Default incentives

Howard Marks: “And it’s important to note that in private credit, what constitutes a default—or even whether lenders will report defaults—is unclear. Lenders have an incentive to grant the borrower an extension rather than report a default, and nobody may be enforcing the reporting of defaults. Particularly for that reason, I wouldn’t put much stock in estimated default rates.”

Private credit defaults are not actually comparable to public credit

Amanda Lynam: “Some people compare defaults in private credit to defaults in public credit, but they are not actually comparable. Maintenance covenants—periodic financial metrics borrowers must meet—are much more common in private credit than in the broadly syndicated leveraged loan market. Because of that, a covenant breach in private credit can be classified as a covenant default, which counts in the default statistics. By contrast, roughly 92% of the broadly syndicated leveraged loan market is “covenant-lite”, meaning the loans don’t have regular maintenance covenants. Consequently, the first sign of default is often a distressed exchange or a missed payment, which can quickly translate into a monetary loss.”

Direct lending will be okay, but it might take a credit cycle to get there.

Howard Marks: “Only after investors have experienced a full cycle in which it swings from being too easy to borrow money to being too hard are they likely to really achieve the understanding of both the positives and the negatives that enables them to make better investment decisions the next time around. That’s ultimately a healthier investment environment, and it may be what lies ahead for direct lending and private credit more broadly. But learning that lesson isn’t always pleasant.”

Loans tagged as PIK-at-restructuring tend to see negative outcomes, but not always

Although investors often treat loans that are flagged as PIK-atrestructuring or non-accrual as reliable markers of future credit impairment, in practice the outcomes are more mixed than that characterization implies. Looking at over 3,000 loans tagged as PIK-at-restructuring, we find that 53% experienced negative outcomes, including principal writedowns, lower prices, or transition into non-accrual status, four quarters later. But over a third improved, either by exiting PIK status or increasing in price. So, while less favorable outcomes are more likely, negative outcomes aren’t a certainty.

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Redemption requests have increased >6x over the last two quarters

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💰Fundraising News

Silver Rock Capital Partners, a New York-based alternative credit manager originally born from Michael Milken’s family office, raised $4 billion for its Tactical Allocation Strategy. The strategy provides capital solutions across corporate and real asset lending, targeting large borrowers globally. More here

Primary Wave Music, a music publisher and partner of Brookfield, closed its $2.2 billion Primary Wave Music IP Fund 4. The fund acquires music to generate consistent and long-term capital appreciation. To date, Fund 4 has invested $700 million in over 65 single-artist catalogs, including The Notorious B.I.G., Village People, and Neil Sedaka. More here

Apollo closed its $1.9 billion Accord Fund VII. The fund is the latest vintage of the Firm’s flagship Accord Dislocation Series, which has raised $11.6 billion since inception in 2017. More here

StepStone closed its $1.6 billion Credit Opportunities Fund II. The fund will invest across the private credit spectrum predominantly through secondaries and co-investment transactions. More here

Crescent Cove, a San Francisco-based manager, closed its $446 million Crescent Cove Fund IV. The fund lends to high-growth technology businesses, including businesses operating in defense tech, autonomous driving, AI infrastructure, and cybersecurity. More here

AllianzGI announced the first close of its $270 million Asia Pacific Infrastructure Credit Fund. The Fund provides secured loans to infrastructure and infrastructure‑like businesses predominantly across South and Southeast Asia. It is focused on energy transition, power, digital infrastructure, transportation and logistics, and environmental infrastructure. The fund is expected to hold its final close in 2027. More here

Hamilton Lane launched its Credit Income Fund, raising $350 million in commitments. The fund will invest in a portfolio of middle‑market senior loans, sourced through Hamilton Lane’s global multi‑manager platform rather than index‑based exposure. More here

This newsletter is for educational and entertainment purposes only. It should not be taken as investment advice.